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1 November 2024

Rupee internationalisation is no cakewalk

Anisree Suresh

India and Myanmar are discussing a full-fledged adoption of a local currency trade settlement mechanism using the Indian Rupee and the Myanmar Kyat to enhance the trade relations between the neighbouring countries. It was discussed during the 8th meeting of the India-Myanmar Joint Trade Committee on September 27th and a meeting between Commerce and Industry Minister Piyush Goyal and Kan Zaw, Myanmar's Minister of Investment and Foreign Economic Relations, on the sidelines of the 12th East Asia Summit Economic Ministers' Meeting at Vientiane, Laos.

While the Rupee-Kyat trade settlement mechanism can potentially enhance trade relations between India and Myanmar, its success hinges on addressing significant challenges such as infrastructure deficits, trade volume, and the formalisation of existing trade practices.

Strategic dimension

India-Myanmar relations and the wide use of the Rupee-Kyat mechanism need to be analysed from the perspective of the potential benefits and challenges framework. Myanmar is strategically important to India's "Act East" policy, which aims to strengthen economic ties with Southeast Asia. Promoting the Rupee-Kyat mechanism would demonstrate India's commitment to enhancing trade and economic cooperation with Myanmar, potentially leading to deeper integration with the Southeast Asian region.

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