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The Indian rupee is anticipated to lag behind the Chinese renminbi when it comes to trade transactions given the slower pace of liberalisation of the former currency in the global trading arena.
Intra-regional trade transactions using renminbi and the Indian rupee are expected to rise. But given that the slower pace of liberalisation of the rupee, its presence in the trade finance space remains limited compared to the Chinese currency.
The Asian Development Bank (ADB) announced on July 17 that it will start supporting deals denominated in the Chinese renminbi - also known as the yuan - and Indian rupee under its Trade Finance Program (TFP). The TFP, which has supported over US$10.6 billion in trade since 2009, used to cover only transactions denominated in US dollars, yen and euros.
"What they are doing is extending to a wider range of currencies to enable international trade, and as you have seen with the renminbi, it now accounts for 10% of trade," said Michael Vrontamitis, regional...