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Success Path UPSC
@successpath22

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Ans- The rupee-dirham trading agreement between #India and #UAE has the potential to significantly impact the future of the Indian economy. This agreement allows for direct trading between the Indian rupee and the UAE dirham, reducing dependence on traditional reserve currencies like the US dollar. Key implications Reduced transaction costs: The use of local currencies will reduce the cost of cross-border transactions, as businesses will no longer need to convert their currencies into dollars. This will make Indian #exports more competitive and attract more foreign investment. Increased trade volume: The use of local currencies will also make it easier for businesses to trade with each other, as they will not need to worry about exchange rate fluctuations. This could lead to an increase in the volume of trade between them. Enhanced financial stability: The use of local currencies will help to insulate the Indian economy from global financial shocks. If the US dollar were to experience a sudden decline in value, it would have a much smaller impact on Indian businesses if they were already trading in rupees. The agreement strengthens economic ties between India and the UAE. As the UAE is a major investor in India, direct rupee-dirham trading can facilitate smoother transactions and attract more #FDI from the UAE. This can contribute to #jobcreation and overall economic development. There are some potential challenges associated with the #rupeedirham trading agreement. For eg, it is possible that the agreement could lead to increased volatility in #rupee . However, the Indian govt has taken steps to mitigate this risk, such as by setting up a #currencyswap arrangement with the UAE. Overall, the rupee dirham trading agreement is a positive development for the Indian economy. It has the potential to reduce transaction costs, increase trade volume, and enhance financial stability. It signals a shift towards a more multipolar currency system, with regional and emerging market currencies gaining prominence. This could potentially undermine the dominance of the #USdollar as the world's reserve currency, leading to a more decentralized global economic order#upsc