India Dumps Dollar In Trade With Sri Lanka

After a discussion held in the Sri Lankan capital, Colombo, last week, India has decided to dump the US dollar in trade with Sri Lanka.

India and Sri Lanka are discussing shifting away from the US dollar to settlements using the Indian rupee, as the two countries look to strengthen their partnership through trade and investments.

Rupee settlements are expected to derive benefits like shorter timelines, lower exchange costs, and easier availability of trade credits for participating financial institutions. The initiative may also have a beneficial impact on the nations’ respective tourism and hospitality industries.

A discussion of the issue, arranged by the High Commission of India, was held in the Sri Lankan capital Colombo last week.

“Representatives from the Bank of Ceylon, State Bank of India, and the Indian Bank shared their experiences and informed the audience that they had started carrying out INR-denominated trade transactions through respective Vostro/Nostro accounts after the creation of [an] enabling framework by the Reserve Bank of India [RBI] and the Central Bank of Sri Lanka [CBSL] in 2022,” the commission said in a statement, seen by the PTI news agency.

Without any explanation, crypto exchange Binance said that it would suspend U.S. dollar transfers, but the company’s subsidiary, Binance US, stated in a tweet that it is unaffected by the ban.

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