‘It will take decades’: RBI Governor on rupee’s internationalisation prospects

Reserve Bank of India (RBI) Governor Sanjay Malhotra on Monday (August 25) said that the internationalisation of the rupee is a slow process and “it will take decades” for trade to happen in local currency.

Delivering the inaugural address at FIBAC ‘Charting New Frontiers’, Malhotra said, “We have agreements with four countries — Maldives, Mauritius, Indonesia, UAE — where trade is happening in local currency. It certainly helps the economy as a whole because it cushions us from the volatility of foreign exchange price movement.”

Malhotra stressed that internationalising a currency requires both time and sustained efforts, adding that the journey for the rupee would be slow.

“It’s a slow process and it will take decades for trade to happen in local currency,” he said.

The central bank has been encouraging the use of the rupee in cross-border trade to reduce reliance on the US dollar and shield the economy from sharp exchange rate swings.

In July, Malhotra had said operational arrangements were already in place with the UAE and that discussions were advancing with the Maldives, backed by a signed memorandum of understanding.

According to Kushal Rastogi, Founder & CEO of Knight Fintech, India’s push to internationalise the rupee is “a strategic move rooted in both economic resilience and geopolitical rebalancing.”

He said the combination of growing global de-dollarisation, India’s digital payments infrastructure, and the RBI’s progressive stance on cross-border payment systems make this “a natural inflection point for elevating the rupee’s role in global commerce.”

On the RBI’s proposal to allow rupee-denominated lending to neighbouring countries, Rastogi said this could “fundamentally reshape regional trade dynamics” by reducing dependency on the dollar, improving settlement efficiency, and positioning India as a financial anchor in South Asia.