Rupee Trade: The nation’s only international financial hub is endeavoring to perceive a significant part of the offshore rupee trading business in the new two years. It is an ambitious and crucial target for India to become an alternative global financial gateway.
PM Modi aims to pitch India as a new destination in Asia for global fund flows. India is likely to be in rivalry with Singapore and Hong Kong with its new rupee trade. The move came after Beijing‘s muscle-flexing in Hong Kong via a new national security law. It would threaten to undermine its role as a regional financial center.
In an email interview, Tapan Ray stated that India’s key elements are its overall stability and predictability in the policy.
Rupee Trade is the Centerpiece of Modi’s Pet Project
When Modi was Chief Minister of Gujarat, he conceived the pet project as his centerpiece. The new rupee trade project offers flexibility in financial transactions. It also provides lower taxes and more relaxed regulations than anywhere else in the country.
The policymakers of India are concerned about the expanding heft of the rupee trade in foreign nations. Hence, they are seeking to fill the gap.
These hubs offer various forms of tradings, including equities, currencies, commodities, and more. They also provide a listing of international bonds. The GIFT city is a known hub that also started rupee trade from derivative settled in foreign currencies in May. Moreover, banks with units in the center could trade in offshore FX markets by the central bank (1).
In Singapore, an investor has access to all major currencies and counterparties. According to the data, the average daily volume of rupee trade in London is 47 billion USD, whereas, in Singapore, it is at 20 billion USD. In the GIFT City, the total capacity stood at 6 billion USD over a month.