India seeks to partially abandon the dollar in oil purchases from the Gulf
Four months after the Indian government rejected requests from Russian oil companies to pay for crude oil exports in Chinese yuan, India now appears to be hoping for a deal that would introduce its own national currency into transactions with crude oil exporters. Gulf.
Bloomberg reports that the Reserve Bank of India (RBI) has asked the country's major state refiners to pressure Persian Gulf suppliers to accept at least 10% of oil payments in rupees in the next financial year, three executives said of processing companies.
The RBI fears that the nation's surge in energy demand could weaken the rupee, a trend that has played out over the past two years (Indian refiners must sell rupees to buy dollars to make payments related to rising crude demand).
Executives interviewed by Bloomberg also stressed that India wants to use the growth in consumption to its advantage, promoting the Indian currency in international trade and reducing dependence on dollars. Indeed, the Rupee has depreciated in recent years
The three refiners – Indian Oil Corp., Bharat Petroleum Corp. and Hindustan Petroleum Corp. – have already approached oil exporters, but suppliers are resisting due to currency risk and conversion costs,
Because the problem is that transactions in rupees only make sense when there are goods of adequate quality and price to be purchased with Indian rupees. If these products do not exist, all that is done is shifting the burden of conversion from the buyer to the seller. India should be more concerned with producing and selling desired goods in international markets at adequate and affordable prices, thus making the rupee more sought after, but let's move on.
Most global oil transactions take place in dollars, although China has had some success in using the yuan more to pay for imports, partly because it is a large producer of goods demanded by international markets.
Last August, Indian Oil partly paid Abu Dhabi National Oil Co for a shipment of 1 million barrels of crude in rupees. No transactions have been carried out in this currency since then.
The country's refiners have also used other currencies, including UAE dirhams, to pay for Russian crude.
India's decision comes days after Russian news agency TASS reported that the BRICS group, comprising Brazil, Russia, India, China and South Africa, will work on creating a payment system based on blockchain and digital technologies .
“We believe that the creation of an independent BRICS payment system is an important goal for the future, based on cutting-edge tools such as digital technologies and blockchain. The main thing is to make sure that it is convenient for governments, ordinary people and businesses, as well as cheap and free from politics,” Kremlin aide Yury Ushakov said in an interview with TASS. This system is called Contigent Reserve Assessment.
As CoinDesk reports, the effort is part of a specific task this year to increase the role of BRICS in the international monetary system.
For some time, the BRICS group has been working to reduce its dependence on US dollars in settlements, also for political reasons, but the issue is then the differences between the economic-industrial systems of the various countries. There will always be countries that have an excess of this currency and countries that have a shortage of it and will have to purchase it on the market. The advantage is that the currency will not be blocked by the Fed.
India is the world's third-largest crude oil importer and is expected to be the main driver of global consumption growth this decade.
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The article India seeks to partially abandon the dollar in oil purchases from the Gulf comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/lindia-cerca-di-abbandonare-parzialmente-il-dollaro-negli-acquisti-di-petrolio-dal-golfo/ on Thu, 07 Mar 2024 09:00:42 +0000.