Back in July, India signed an agreement with UAE to settle trade in ₹ instead of $. India is the world’s 3rd biggest oil importer and consumer and has now made its first trade with the UAE in ₹ and Dirham (AED).
Indian Oil Corp. (IOC) made a payment to Abu Dhabi National Oil Company (ADNOC) to purchase millions of oil barrels.
Last financial year, bilateral trade between India and UAE was around $84.5 billion (Rs. 6992.2 billion).
This move follows another recent deal. What is it? It was the sale of 25 kg of gold from a UAE-based exporter to an Indian buyer for ~ Rs. 128.4 million ($1.54 million). But why local currency?
- To cut transaction costs by eliminating dollar conversions.
- Seamless cross-border transactions and payments
- Foster greater economic cooperation
- Boosting investments
Reducing reliance on US$. UAE is not the only country where India has signed a trade agreement. There are other countries, like: Tanzania, Indonesia, Russia (still ongoing)
Exciting times are ahead! But do you think any currency can replace US$ anytime soon?
