Opaque currency regime may restrict rupee-renminbi trade mechanism

The government’s plans on having a rupee-renminbi trading arrangement with Beijing, bypassing the dollar, may be difficult to achieve.

While traders will benefit from lower transaction costs, there are pitfalls of doing trade in a currency that is not free-floating. China continues to change the value of the renminbi to suit its monetary and foreign policy interests.

The plan was suggested on Thursday during an inter-ministerial meeting chaired by Commerce and Industry Minister Suresh Prabhu on increasing domestic production and export capabilities across sectors.   "Back in 2009-10, China was offering up to 15 per cent concession if countries used their