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World Weaning Away From The Dollar? India Purchases 1 Million Barrels Of Oil In Rupees, Not Dollars For First Time – De-Dollarization Trend Gains Momentum

In mid August, India made its first crude oil payment to the United Arab Emirates (UAE) in Indian rupees, marking a significant shift away from the dominance of the U.S. dollar in international trade. This move comes as part of a broader trend where a growing coalition of nations is seeking to conduct global trade in their local currencies.

Indian Oil Corp (IOC.NS), India's leading petroleum refiner, initiated the payment in rupees for the purchase of one million barrels of oil from the UAE, specifically the Abu Dhabi National Oil Company (ADNOC). This groundbreaking transaction follows a recent deal involving the sale of 25 kilograms of gold (55 lbs) from a UAE gold exporter to an Indian buyer, amounting to approximately 128.4 million rupees ($1.54 million).

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The transition towards conducting trade in local currencies rather than the U.S. dollar gained momentum after India signed an agreement with the UAE in July, allowing trade settlements in rupees instead of dollars. This move is aimed at reducing transaction costs by eliminating the need for dollar conversions.

This trend can have an impact on currency markets, affecting how currencies are valued and traded. Central banks, which manage a country's money, are also getting involved by changing the currencies they hold in their reserves. All of these changes are making the global financial system more diverse and resilient, which means it can better withstand challenges. Investors and traders are keeping a close eye on these developments as they can affect how they make money in currency markets.

During a visit by Indian Prime Minister Narendra Modi to the UAE, both countries further solidified their commitment to this shift by agreeing to establish a real-time payment link to facilitate easier cross-border money transfers.

The bilateral trade relationship between India and the UAE has been strong, with trade amounting to $84.5 billion in the 2022/23 fiscal year.

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This development is not isolated but part of a broader de-dollarization trend. De-dollarization refers to the efforts made by countries to decrease their dependency on the U.S. dollar and reduce its influence on their economies. While this trend is gaining traction, it's important to recognize that the U.S. dollar remains the most widely held reserve currency globally and is integral to international business transactions.

There is a growing need for a more diversified and resilient global financial system, one that is less vulnerable to the fluctuations of a single dominant currency. According to the Economic Times, Chirag Mehta, Chief Investment Officer (CIO) at Quantum AMC, stated, "The de-dollarization narrative is for real and has been shaping up for some time."

Mehta further underscores the trend by stating, "The void left by the dollar will be positive for gold. The share of gold in countries' forex reserves has been on the rise, and this trend is here to stay." This highlights the increasing interest in alternative assets like gold as countries seek to diversify their holdings in response to the evolving landscape of global finance.

The shift towards de-dollarization is not confined to India and the UAE. Powerful nations such as China and Russia are also exploring alternatives to the dollar in response to U.S. sanctions and foreign policy actions. In August, the BRICS bloc expanded its membership to include Saudi Arabia, Iran, Ethiopia, Egypt, Argentina, and the UAE. These nations share a common objective: to rebalance the global economic landscape, which they perceive as overly reliant on the U.S. dollar.

While the U.S. dollar remains a crucial element of global finance, the push for de-dollarization and the growing interest in alternative assets like gold are reshaping the landscape of international trade and financial reserves.

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This article World Weaning Away From The Dollar? India Purchases 1 Million Barrels Of Oil In Rupees, Not Dollars For First Time – De-Dollarization Trend Gains Momentum originally appeared on


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