Must be controlled.

"RBI had put in place the mechanism for rupee trade settlement with eighteen countries by allowing banks from these countries to open Special Vostro Rupee Accounts (SVRAs) for settling payments." As of now, "Most of the global trade takes place in USD. It gives USA an ease to print more money and facilitates taking more debt from other countries." "The internationalisation of the INR will not only save transaction costs on foreign trades," but, "the stable and solid INR will increase purchasing power for Indians," wrote Jimeet Modi. To be truly international the Indian rupee (INR) must be fully convertible to other currencies. "Currently, there are limitations on how much capital can flow in and out of the country." But there could be problems. "First, it will be more difficult to maintain closed capital accounts. Secondly, a free capital account needs two key factors - low inflation and little overspending by the government." Kotak Securities. At the moment there are restrictions on individual Indians but the government does whatever it likes. Which is why the INR keeps falling against the dollar. It has fallen from 60.95 to one dollar in 2014, when this government came to power for the first time, to 83.46 as of 03 April 2024. Forbes. That is a fall of 36.93% in 10 years, despite our foreign currency reserves reaching an all time high of $645.6 billion as of 29 March, according to the RBI. Since then, "India's forex reserves contracted by$2.83 billion to $640.33 billion as of April 19." ET. This is because the RBI buys and sells foreign currencies to keep the rupee steady. "The Indian central bank's tight grip on the rupee is boosting the allure of the currency for carry trades, according to Fidelity International." "The Indian rupee is among the most stable Asian currencies, thanks to repeated interventions from the Reserve Bank of India (RBI) as it seeks to slow its decline near a record low." MC. "A carry trade is typically based on borrowing in a low-interest rate currency and converting the borrowed amount into another currency. Generally, the proceeds would be deposited in the second currency if it offers a higher interest rate." Investopedia. "While the Indian economy is growing at a robust pace with an average annual growth of 8% during the last three years, the RBI MPC (Monetary Policy Committee) stated that the path of disinflation needs to be sustained till inflation reaches the 4% target." FE. "The interest rate differential between domestic and US sovereign bonds has shrunk to its lowest levels in at least 17 years," as foreign investors pour money into Indian government bonds. In 2023, the average yield gap was 326 basis points, the lowest since 2007. "From 2014 to 2022, the yield on the Indian 10-year bond was higher than the US 10-year bond by 504 basis points on average." ET. Even with the RBI fiercely controlling the rupee it has fallen by 37% in 10 years. No knowing how much it would fall if made fully convertible. Never going to happen.