U.A.E. and India have made history made entering into an agreement which lets them conduct businesses on both sides by bypassing the US Dollar or any other currency. This agreement enables both the countries to trade directly in their currencies.
The agreement will ensure substantial savings on both sides, and the trade between the two countries will reach a new high. The Indian ambassador to U.A.E. Mr.Navdeep Suri said that this agreement is in addition to the other significant agreements and MOU’s signed by the Prime Minister Narendra Modi’s recently concluded two-day visit to Abu Dhabi and Dubai.
The other agreement finalized is the Currency Swap where the Central Banks of UAE and India will be able to trade in Rupees and Dirhams and not have to go through US Dollars which means that there is a considerable saving for the business community.
Even though the UAE Dirham has a fixed peg to the US Dollar, the currency swap agreement between the UAE and India could favorably impact trade between the two countries as the Trump Administration in the US fortifies the expansionary fiscal policy and the US Federal Reserve is considering rate hikes.
The effect of the US fiscal policies on the Indian Rupee would be significant. It is profitable to trade in with the U.A.E. since the Indian currency value does not depend on the Dollar but is determined by a collection of currencies. The reason behind this agreement is evident from the statistics of the UAE-Indian trade figures.
The Bilateral trade figures started from a mere $182 million in the year 1982 and had now reached USD 53 Billion. This information was released in a joint statement issued at the end of Mr. Modi’s visit.
The other agreement is between the Financial Intelligence Units and will commit U.A.E. and India to work together more closely in the area of money laundering and prevention of money laundering. The Joint statement also reported that “the two sides welcomed the finalization of the MOU on cooperation and the exchange of financial intelligence related to money laundering, associated predicate offenses, and terrorist financing.”
