NEW DELHI, July 15 (Reuters) - India has signed an agreement with the United Arab Emirates that will allow it to settle trade in rupees instead of dollars, boosting India’s efforts to cut transaction costs by eliminating dollar conversions.
During a visit by India’s Prime Minister Narendra Modi to the UAE on Saturday, the two countries also agreed to set up a real-time payment link to facilitate easier cross-border money transfers.
The two agreements will enable “seamless cross-border transactions and payments, and foster greater economic cooperation”, said a statement from the Reserve Bank of India on Saturday.
Are you conflating demonetization of a currency note with devaluation of currency ?
There was no apparent currency devaluation beyond the typical trend AFAIK.
But yes the move was at best a stupid blunder that impacted a billion people unnecessarily or worse, aimed to achieve an alternate agenda. It did end up in greater adoption of the UPI platform granting the govt more control over the currency flows.
I agree they’re not the same, but the impact on the perception of the currency was similar, especially domestically, nobody wants to think their money can be made worthless tomorrow.
Oh the impact was not uncertainty on INR.
Not many were worried the Indian rupee would crumble, if so there would have been a greater scramble to convert to other currencies or to precious metals, etc. Instead people were still queuing up to deposit in their INR bank accounts. So confidence on the rupee didnt seem affected much, especially domestically.
Rather the impact of the lack of spendable currency is believed to have lowered the GDP and low spending affected businesses.
On the other hand, many with black money were scrambling to purchase expensive goods in places that were still accepting the cash. That probably hides the true impact on the common people, given how above 96% of the circulating cash was returned, proving the blackmoney was successfully laundered.