HOPE FOR INDIAN CURRENCY TO BE INTERNATIONAL
WHAT IS INTERNATIONAL CURRENCY?
Before discussing Indian Currency let’s discuss International currency. It refers to a currency that is widely accepted and used in transactions across different countries. In Egypt, the US Dollar is commonly used and preferred over the local currency. This preference can be attributed to several factors such as stability, confidence, and ease of use. The US Dollar is recognized globally and offers a sense of security for both locals and international visitors.
Additionally, using a well-established international currency like the US Dollar simplifies financial transactions for businesses operating on an international scale. In many countries, it is common for other currencies to hold value. For instance, the USD is widely accepted and can be used globally as an international currency. This provides convenience and flexibility for individuals traveling or conducting business abroad. International currency refers to a currency that is widely accepted as a form of payment in multiple countries. It is commonly referred to as an “actively traded currency” due to its widespread use and acceptance globally.
In the past, people did not have currency as a medium of exchange. Instead, they relied on a system known as barter. This involved individuals or communities directly trading their surplus goods or services with each other in order to meet their needs. For instance, if one country specializes in growing chili peppers and another country focuses on cultivating potatoes, they would find themselves with an abundance of their own product but a shortage of the other.
In order to address this trade imbalance, they could engage in a barter system and exchange their respective goods with each other. This mutually beneficial arrangement allows both countries to meet their needs and maximize the utilization of their resources. However, due to the various challenges encountered with bartering systems, paper currency was introduced as a practical solution.
HOW US DOLLAR BECAME INTERNATIONAL(GLOBAL) CURRENCY
Trust in paper currency is essential for its acceptance and use in trade, both domestically and internationally. After World War II, the United States emerged as the dominant global force in terms of both economic strength and military power. The aftermath of war left numerous nations in a state of devastation, yet the US economy managed to remain resilient. This positioned the US dollar as a strong contender to become a global currency, offering stability and advantages that others lacked. Back in 1944, a historic meeting took place in Bretton Woods, New Hampshire, where 44 nations came together to forge a new global financial system.
The outcome was the establishment of two influential organizations – the International Monetary Fund (IMF) and the World Bank. Additionally, this gathering saw the US dollar being designated as the world’s reserve currency, solidifying its importance on the global stage. The US dollar played a convincing role in the global financial system as other countries chose to tie their currencies to it. This was primarily due to its backing by gold, which added an element of stability and trust.
INDIAN CURRENCY TO BE GLOBAL
While the Indian currency has potential, becoming an international currency in the near future may be challenging due to a higher volume of imports compared to exports. This trade imbalance makes it difficult to establish control and gain the position of a widely traded currency globally. The acceptance of a currency on the international stage is heavily influenced by the size and stability of an economy. India, despite having one of the largest economies globally, still faces challenges due to its relatively low GDP per capita when compared to developed nations.
The strength and stability of an economy, including low inflation and consistent growth, are essential considerations when determining the attractiveness of a currency as an international reserve. A stable currency is of utmost importance for it to gain widespread acceptance on the global stage. The exchange rate of the Indian Rupee has been subject to notable fluctuations, which may potentially raise concerns for international investors and reduce its appeal as a reserve currency.
HOPE FOR INDIAN CURRENCY TO BE INTERNATIONAL
India has emerged as one of the most rapidly growing major economies in recent times. With ongoing structural reforms and sustained economic growth, investor confidence is bolstered, thereby increasing the appeal of the Indian Rupee as a prominent global currency. Expanding trade and investment policies can greatly benefit India by attracting more foreign investors and facilitating increased cross-border transactions in Indian Rupees. This would lead to a boost in economic growth and financial stability for the country. By prioritizing the facilitation of business operations and streamlining regulatory procedures, India can position itself as an enticing hub for global enterprises.
This will naturally drive up the demand for the Indian currency, benefiting both domestic and international stakeholders. To further strengthen this momentum, the Indian government should actively promote the use of the Indian Rupee in international transactions, showcasing its stability and reliability on a global stage. Promoting the inclusion of Indian Rupees in the foreign exchange reserves of central banks and financial institutions worldwide can greatly enhance its global recognition and acceptance. This strategic move would contribute to bolstering India’s presence on the international stage and strengthening its economic influence.