Govt makes first crude oil payment to UAE in Indian rupees

[kaykay]

Govt makes first crude oil payment to UAE in Indian rupees

Indian Oil Corp made payment to Abu Dhabi National Oil Company (ADNOC), according to a statement issued by Indian embassy in UAE.

www.moneycontrol.com

India and the United Arab Emirates have started settling bilateral trade in their local currencies with India's top refiner making payment in rupees for purchase of a million barrels of oil from the Middle Eastern nation, the Indian government said on Monday.

Indian Oil Corp made payment to Abu Dhabi National Oil Company (ADNOC), according to a statement issued by Indian embassy in UAE.
The transaction comes after one involving the sale of 25 kg gold from a UAE gold exporter to a buyer in India at about 128.4 million rupees ($1.54 million).

India in July signed an agreement with the UAE allowing it to settle trade in rupees instead of dollars, boosting India's efforts to cut transaction costs by eliminating dollar conversions.

During a visit by Indian Prime Minister Narendra Modi to the UAE, the two countries also agreed to set up a real-time payment link to facilitate easier cross-border money transfers.
Bilateral trade between India and UAE was $84.5 billion in 2022/23.

India is keen to push similar local currency arrangements with other countries, as it looks to boost exports amid slowing global trade.

 

[Puffin]

The bilateral trade between UAE and India is $85 billion. If this trade can take place in Rupees and AED then it could turbo charge the trade between the 2 countries. It would also free up a necessity to hold vast quantities of US Dollars offering both nations greater flexibility in international trade.

 

[my2cents]

Will INR ever become a reserve currency?

 

[Vikramaditya-I]

Will INR ever become a reserve currency?

That'll be risky. Hopefully not very soon.

 

[my2cents]

That'll be risky. Hopefully not very soon.

Is China in a position to make its currency a world reserve currency?

 

[Vikramaditya-I]

Is China in a position to make its currency a world reserve currency?

RMB is a reserve currency, it's already in the SDR basket. But when you look at it, in the past 10 years the currency made less than 15% swings in either direction and it stays within that 20% limit, in contrast, INR lost more than 50% of its value to USD. If Rupee becomes an international currency, we will have a hard time controlling its value. Right now RBI can buy Rupee back if the price falls too hard, or increase liquidity when the price is raising fast and wants to keep it lower. I don't think RBI will be too keen on increasing the international status of Rupee without actually increasing our trade and let Rupee stabilize like the RMB or EUR.

 

[VkdIndian]

Does INR have the muscle power of RMB? I don’t think INR has reached that place yet.

If we can make bilateral agreements and shift some of our trade into mutual currencies then that would be good enough for the time being.