Dollar Discarded: Now Shop In Dubai Using Indian Rupees; Iran Will Sell Oil Using Rupee Payment
Indian Rupee is now slowly but gradually emerging as a strong alternative to the Dollar.
The Indian Rupees has been under pressure since some time now, as the value of the dollar is increasing, so are import costs and cost of raw petroleum.
From the low of Rs 63.27 in July, USD to INR conversion touched Rs 74.59 in October, and entire India was worried.
The value of the dollar has now come down, but still, it is hovering around the Rs 70-Rs72 mark, which is indeed alarming.
So, what is the solution then?
Omitting dollar in business transactions, and relying on INR does seem to be a feasible solution. And two very important updates have come in regarding this.
Welcome to the new age of a strong Rupees!
Shop in Dubai Using INR
This week, UAE and India signed a very crucial currency swap agreement, amounting to Dh2 billion or 35 billion Indian rupees, which will not only help these two countries to build their ties, but also make Rupees stronger.
UAE’s minister of foreign affairs and international cooperation, Shaikh Abdullah Bin Zayed Al Nahyan met with Sushma Swaraj, India’s Minister of External Affairs in Abu Dhabi and announced this mega cooperation.
As part of this currency exchange program, Indians can now shop in Dubai using INR: Hence, there is no need to convert currency into dollars or dirham to do shopping in Dubai anymore.
Indian Embassy in Dubai said, “The bilateral currency swap agreement between India and UAE is expected to reduce the dependency on hard currencies like US dollar,”
This move will make trading between UAE and India more seamless, easy, and also remove the high transaction cost pertaining to USD conversion, and avoid the volatility of the forex market.
India and UAE’s bilateral ties stand at $54 billion, and non-oil trade is $34 billion. While Indians pumped in $6.6 billion into UAE as FDI last year, UAE’s FDI into India was $5.8 billion.
We can expect the trade ties between India and UAE to grow further, after this currency exchange agreement.
Iran Will Accept INR For Oil Payments
Meanwhile, within 24 hours after the currency swap between UAE and India was announced, India has scored another major win for INR in the Middle East.
India and Iran have now signed a pact, based on which, Iran will accept payments for oil purchased by India in INR.
This is a major news, because till now, India paid to Iran using euros, and a strong dollar against Rupees meant huge overheads.
Now on, India can pay for the oil directly into the UCO Bank account of the National Iranian Oil Co (NIOC).
India is right now Iran’s 2nd largest purchaser of crude oil after China and purchases 1.25 million tonne or 15 million tonne in a year (300,000 barrels a day).
Iran is World’s 3rd largest supplier of crude oil after Iraq and Saudi Arabia, and India is the world’s third-biggest oil consumer, as it meets 80% of its oil needs via imports.
We are consulting with financial experts, and trying to understand whether this trade of oil via INR will lead to cheaper oil prices in India or not.
We will keep you updated.