India has recently utilised rupees for the first time to pay for crude oil procured from the United Arab Emirates (UAE), Bloomberg reported.
This move signifies a potential strategic endeavor to boost the global standing of the local currency.
The decision aligns with India’s broader initiatives to diversify oil providers, reduce transaction expenses, and establish the rupee as a viable trade settlement currency, following the Reserve Bank of India’s directive on July 11, 2022.
While officials highlight the ongoing nature of internationalization, there are currently no specific targets.
In July, Indiformalised a rupee settlement agreement with the UAE, leading to the Indian Oil Corporation (IOC) making payments in rupees for one million barrels of crude oil from Abu Dhabi National Oil Company (Adnoc).
Furthermore, some Russian oil imports have also been settled in rupees. Given that more than 85% of its oil requirements come from imports, India employs a multifaceted strategy, prioritizing cost-effective suppliers, diversifying sources, and meeting international obligations.
This approach proved beneficial during increased Russian oil imports, resulting in substantial savings.
Despite these efforts, India aims to explore trade settlements in rupees instead of dollars to streamline transactions by eliminating currency conversions.
