Colombo, December 18: Several foreign media on reported that Sri Lanka will be one of the first countries to use the Indian rupee trade settlement mechanism. The dollar-strapped Sri Lanka will implement the game-changing initiative that allows using Indian rupees instead of dollars and other major currencies for International transactions.

Reportedly, banks from the neighbouring island nation have opened special rupee trading accounts called Vostro accounts. This comes days after the Central Bank of Sri Lanka said that it was awaiting the Reserve Bank of India's approval to designate Indian Rupee (INR) as a foreign currency in Sri Lanka. This means that Sri Lanka and Indian nationals can use INR instead of US dollars for international transactions with each other. Indian Rupee Strong Against Every Currency, RBI Intervened in Markets: Sitharaman Tells Lok Sabha.

The Reserve Bank of India announced the decision by allowing trade settlements between India and other countries in Indian Rupees (INR) on July 11, 2022. Year Ender 2022: Sri Lanka Witnesses Major Economic Setback, Political Crisis and Never-Seen-Before Mass Protests.

"The government is looking to bring more countries that are short of dollars into the mechanism. As of now, five to six banks have been allowed to open Vostro accounts to facilitate international trade settlement in rupees," an Indian government official said.

(The above story first appeared on LatestLY on Dec 18, 2022 09:38 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).