India's ambassador to the UAE says the move will mean savings for the business community
The UAE and India have reached an agreement that will enable businesses in both countries to bypass the dollar and other foreign currencies and trade directly in dirhams or rupees, according to India’s ambassador to the UAE, Navdeep Suri.
“[This] means that there is a saving for the business community,” Suri said. “It makes trade between the two countries more competitive.”
Although the dirham is pegged to the US dollar, the currency agreement could positively impact trade between the two countries, particularly in light of the US government’s expansionary fiscal policy and the US Federal Reserve’s consideration of rate hikes.
The impact of these US policies on the Indian rupee would be greater, since the Indian currency’s value is not pegged to dollar but instead is determined by a basket of currencies.
According to a joint statement released at the end of Indian Prime Minister Narendra Modi’s visit to the UAE this week, bilateral trade between India and the UAE amounted to $53 billion.
Additionally, the two countries also signed an agreement to work together to combat and share intelligence on money laundering and terrorist financing.