India is likely to introduce “foreign exchange” and “foreign investment” to make the country “more competitive”, Finance Minister Arun Jaitley said on Monday.
He said foreign exchange, which is a unit of value of a country, was not used in foreign exchange markets.
Foreign exchange is used in currencies to make foreign exchange transactions easier.
The minister said this would ensure that the currency is not in short supply, while allowing India to keep a surplus.
A country’s currency is used to make payments to its foreign creditors.
India’s currency has fallen to a seven-year low of 9.27 to the dollar from a high of $1.31.
Its main trading partner, the US, has kept the dollar steady against the greenback, with the US Treasury buying $10.5 billion of Indian currency.
India’s Reserve Bank of India (RBI) on Monday cut interest rates for the first time in four years.
The central bank will issue 1,000 new notes, and will continue to buy foreign currency.
It said it will maintain its policy of purchasing foreign currency from banks to keep the country’s exchange rate steady.
“The government is committed to ensuring that foreign exchange is not used as a tool to manipulate the Indian currency, which we will not allow,” Jaitleys said.
Jaitley did not give a timeframe for the introduction of the new currency.
The government has previously announced the introduction in October this year of a new currency, the Rupee.
This new currency would be worth 1,500 rupees.
The RBI is also introducing a new unit of currency, 1.5 rupee, to replace the rupee.
It will be printed in 10 million units of 10 billion rupees (about Rs.6.5 lakh crore) and would be used in electronic payments.
The currency will replace the US dollar, the Indian rupee and the Japanese yen.