Rupee races to replace dollar: Egypt latest entrant to club of countries wanting to trade in INR

New Delhi: Faced with difficulties in making payment in dollars, Egypt is now looking to adopt the rupee to import at least 1.5 lakh tonnes of rice from India.

If the deal to settle trade in Indian rupee between Cairo and New Delhi goes through, Egypt would join 18 countries — Russia, UK, Singapore, Germany etc — that have agreed to trade in INR and give up dollar for cross-border transactions.

Between April and January this fiscal, Egypt has imported 76,858 tonnes of rice. The country recently purchased two ship loads of rice, however, it had to “face tremendous difficulties” in settling the trade in dollars, a report by The Hindu BusinessLine quoted a source saying.

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Now, as Egypt needs another six ship loads of rice, which could weigh over 1.5 lakh tonnes, it has sought to make the payment in INR, the source added.

Willing to take orders in rupee route

Exporters from India said they are willing to settle cross-border trade for foodgrains in rupee, provided the Union government offers some concessions.

“Exporters get a forward premium of 0.5 per cent to 1 per cent while trading in the dollar. There are quite a few ways in which the government can compensate the traders for this,” the report quoted President of The Rice Exporters Association (TREA), BV Krishna Rao as saying.

Rao further said the government should facilitate export transactions in INR in the long-term interest.

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Egypt and most of North African nations have been facing currency problems, especially with regard to the dollar.

To facilitate smooth trade, Egypt has started trade dealings with Russia in local currencies.

Since 8 September, 2022, the Indian government has curbed rice exports and imposed a duty on export of white rice.

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The country has also banned shipment of fully broken rice, rice exports, including Basmati. The decision was taken after India’s rice production during the kharif season was feared to have been affected by scanty rains in key producing regions.

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