The currency exchange contract is such a pact between two countries, which allows trade in their own currency and payments for import and export transactions at a predetermined exchange rate, without introducing a third reference currency, such as the U.S. dollar. The dominance of the dollar and the U.S. use of money to blackmail other countries have forced countries to act in local currency. There are other countries, such as China, South Korea, which also have currency exchange agreements with other countries. China has swap agreements with Argentina, Brazil, Hong Kong, Indonesia, Malaysia, Russia, Singapore, South Korea, the United Kingdom and many other countries. Trade in the national currency is advantageous on many fronts. A country can save its currency if it acts in local currency. The recurrent balance-of-payments crisis in developing countries could also be resolved by trade in local currencies.

Currency swea also increases the value of the respective currency against the dollar. In recent years, India has focused on local currency trade and has signed currency exchange agreements with many friendly countries. Trade in local currency will also help to improve the stature of Indian Rube ees in the global foreign exchange market. The agreement was falsified during a two-day visit by Indian Foreign Minister Sushma Swaraj. The Minister chaired, together with the Minister of Foreign Affairs and International Cooperation at the Ministry`s headquarters in Abu Dhabi, the twelfth meeting of the Joint Commission (EI) and India with Mr. Chich Abdullah bin Zayed Al Nahyan, Minister of Foreign Affairs and International Cooperation. The two heads of state and government agreed to strengthen cooperation during the years of trade, security and defence. The Heads of State and Government also decided to strengthen their resolve to combat extremism and terrorism in all its forms, regardless of their perpetrators and intentions. Bilateral trade between the two countries amounted to about $52 billion in 2017, according to the Indian Embassy in the United Arab Emirates. In 2015, the Central Bank of China renewed a $5.54 billion foreign exchange agreement with the Central Bank of the United Arab Emirates.

The second agreement would allow both sides to carry out development projects in Africa. India and the UAE on Tuesday signed two agreements, including one on currency swap, as External Affairs Minister Sushma Swaraj held extensive discussions with his counterpart Abdullah bin Zayed Al Nahyan to intensify cooperation in areas such as trade, security and defence. „The bilateral currency exchange agreement between India and the United Arab Emirates should reduce dependence on hard currencies such as the U.S. dollar,“ he added, adding that the two central banks had accepted the agreement. Currency exchange is an agreement whereby a country agrees to exchange its national currency for another currency.