As UAE-India trade grows, so too will INR currency futures

As UAE-India trade grows, so too will INR currency futures

India and the UAE have shared trade links for centuries. Since the 1960s, Abu Dhabi’s growth as an oil exporter expanded what was principally a relationship dominated by agricultural items. Bilateral ties gained new impetus in the nineties, thanks to Dubai’s growth as a regional trading hub and India’s policy of economic liberalisation.

Today, the UAE is India’s third largest trading partner after the US and China. Trade between India and the UAE totalled almost $73 billion in 2021-2022. India is the second-largest export destination for the UAE, with non-oil trade calculated at $45 billion for the same period.

And this continues to grow rapidly. In the first year of the UAE-India Comprehensive Economic Partnership Agreement, between April 2022 and March 2023, bilateral trade grew 16% to reach $84.5 billion.

Now, global events could further transform that relationship. With the US dollar increasingly being seen as a policy instrument, the UAE and India are now considering settling imports and exports via a rupee-dirham exchange mechanism. The move would reduce transaction costs and simplify bilateral trade.

INR trading volume boom

The growing relations between UAE and India will push USD/INR futures into a boom, especially as INR builds on the momentum it gained as a widely