Viewing a single comment thread. View all comments

CopyMonet t1_je2j3i9 wrote

Yes, you are correct as far as I have read. I just want to add some things. The exchange rate development between USD and IND is not as important for Egypt as the exchange rate development between IND and EGP, if that is their more important trading partner. Also the exchange rate to USD is not the same as the development of prices of Indian export goods. Just because the INR is losing value in comparision to USD, does not mean that you necessarily get less goods for the same amount from India. The USD might even be useless to you, if you can not pay the things you want to buy with it. As the arcticle says they faced "tremendous difficulties" (whatever that means) to make that mentioned trade in USD. It might not be possible the change your EGP to USD, or to change your USD to INR, or to pay in USD, or to obtain enough USD at all. However it will surly be possible to pay an indian company with INR. Tbh I don't know much about either of these countries, but India might not need USD now or in the future. Even if India has to subsidize it currently, it may be worth it for them to get rid of the USD and stop accepting it at all. I would also not make the mistake to think that the past is always representive for the future. Decision like these will give the INR more stability. I would also try to exclude third party currencies from my trades. Nothing is more valuable than an accepted currency that you control.


TheGreatOneSea t1_je2s3t3 wrote

India will keep taking USD, because trade with the US is over $100 Billion USD: we're talking, "India must disband its entire military to offset the loss" levels of money. And that's assuming the US doesn't pressure others to avoid the INR, which would tank its value from the uncertainty alone, at least for a while.

It makes far more sense for India to just subsidize Egypt by allowing it to use INR to buy goods cheaper than with USD, rather than not taking USD.


CopyMonet t1_je2w400 wrote

Yeah, that might be true. As said I don't know that much about them. I just meant potentially.