India, Sri Lanka collaborate to strengthen trade interactions through local currency settlement initiative
India and Sri Lanka are enhancing trade by settling transactions in local currencies to reduce costs and mitigate dollar volatility.Summary
India and Sri Lanka have initiated discussions to strengthen trade interactions by settling transactions in local currencies. This initiative aims to reduce transaction costs and eliminate conversion losses while insulating bilateral trade from dollar volatility. Santosh Jha, the Indian High Commissioner, emphasized that local currency settlement reduces pressure on scarce hard currency reserves for Sri Lanka and allows for free rupee-to-rupee trade flows. The round-table discussion, organized by the Indian High Commission in Colombo, brought together government, banking, and industry representatives to explore opportunities for deeper economic engagement. The event highlighted the operational aspects of INR-LKR trade settlements and the potential for smoother cross-border transactions. The discussion also stressed the need for continued awareness-building, stronger banking linkages, and greater private sector participation to unlock the full potential of local currency settlements.
(Source：The Economic Times)