Indian Rupee Gains Ground in Bilateral Trade: A Landmark Step with UAE
Bold New Step in Indian Rupee Trade as UAE Deal Marks Watershed Moment
The Indian rupee, the nation’s currency, has achieved a significant milestone in its journey towards enhanced credibility and recognition. A groundbreaking development has emerged, highlighting the use of the Indian rupee in bilateral trade between India and the United Arab Emirates (UAE) for the very first time. This marks a noteworthy shift as the Indian Oil Corporation (IOC), the largest oil refinery in India, executed a transaction in Indian rupees to secure the purchase of several million barrels of crude oil from the UAE. This historic transaction represents the debut of the Indian currency in the procurement of oil from this Gulf nation.
Pioneering Payment: IOC Breaks New Ground
In a historic first, the Indian Oil Corporation (IOC) conducted a payment transaction in rupees to acquire crude oil from the Abu Dhabi National Oil Company (ADNOC). The Indian High Commission in the UAE has officially confirmed this significant development through an official statement. This transformative transaction was carried out under the framework of the Local Currency Settlement (LCS) agreement, underscoring the robust economic ties between India and the UAE.
Confluence of Currencies: Rupee and Dirham in Unison
This groundbreaking deal facilitated the acquisition of a substantial quantity of crude oil, encompassing the sale of 100,000 barrels. Importantly, the transaction involved the utilization of both the Indian rupee and the UAE dirham, further cementing the economic partnership between the two nations. The bilateral relationship between India and the UAE holds immense economic significance, with the UAE emerging as a pivotal energy partner for India. The enduring history of cooperation in the oil and gas sector has forged a strong bond between the two nations.
Roots of Agreement: Modi’s Landmark Visit
The genesis of this groundbreaking agreement traces back to July, when India and the UAE forged a pivotal pact. The agreement mutually enabled India to effectuate payments to the UAE using its own currency, the rupee, instead of the customary practice of using the US dollar. This strategic maneuver was a two-pronged endeavor: to diminish the undue influence of the dollar in India and to bolster the usage of the rupee for transactions. This move was designed to lower transaction costs by circumventing the need for dollar conversion.
Strategic Move Amidst Collaborative Initiatives
The landmark agreement was inked during the visit of Prime Minister Narendra Modi to the UAE. The collaboration extended beyond currency utilization and encompassed the establishment of real-time payment conduits for seamless cross-border money transfers. The bilateral trade volume between the two nations amounted to a substantial $84.5 billion during the fiscal year 2022-23, underscoring the robust nature of their economic partnership.
Paving the Way for the Future
The pioneering step taken with the UAE is a testament to India’s commitment to expanding the usage of its local currency in international trade. This strategic approach seeks to amplify exports, fortify the Indian currency’s stature, and promote self-reliance. As efforts continue to foster trade in local currencies with other nations, India is poised to bolster its economic footprint and assert the Indian rupee’s global relevance.
