In the process of internationalization of the rupee it comes with the multiple advantages like reduction in the dependence on the US dollar, enhancements in the globally trading Indian businesses and the most important strengthening of our economy. Promoting the rupee will also reduce the transaction costs which will benefit the Indian importers and the exporters.

But with every shift comes risk. Increasing exposures to financial markets globally can lead to greater unpredictability because the rupee would be more influenced by the international economical fluctuations. This would lead to higher inflation rates which will destabilize our domestic economy. Additionally the Indian financial system will face challenges in managing the liquidity as well as the exchange rate risks as we have relatively less developed financial infrastructure compared to other global currencies.

Furthermore, there’s also the risk of revengeful measures from the other powers of the economy which will perceive this internationalization of the rupee as an upcoming threat to their economy.

In conclusion, while internationalization of the rupee offers a variety of benefits but it comes with greater and parallel risks as well, so it requires careful management and risk mitigation techniques pre – planned to ensure that the advantages overpowers potential economic instabilites.