• India and the UAE complete a first-time crude oil transaction using their local currencies, bypassing the US dollar.
• This trade shift is part of a larger strategy developed in July, promoting trade in native currencies and slashing dollar-conversion costs.

“History in the making!” Tweeted JackTheRippler as news broke about the groundbreaking crude oil transaction between India and the UAE. In a departure from traditional methods, this trade sidestepped the US dollar, favoring the Indian rupee.

Beyond Just Trade: The July Agreement

This isn’t just about oil. Last month, India and the UAE embarked on a broader strategy, inking an agreement that facilitates trade in their respective local currencies. The pact not only circumvents dollar conversion but also ensures that the cumbersome costs associated with it are curtailed.

Furthermore, their collaboration doesn’t end with currency. The two nations anticipate a real-time payment connection, streamlining cross-border money transfers. Add to this the exciting proposition for cardholders; soon, Indians can use their RuPay cards in the UAE and vice versa due to the proposed interlink between RuPay and UAESWITCH.

The Bigger Picture: India’s Global Rupee Ambitions

While the rupee’s global journey has had its challenges, its integration with the UAE’s trading system is a commendable step. Still, let’s gain some perspective. When pitted against India’s whopping $1.2 trillion goods trade from the previous fiscal year, the rupee’s global trade volume seems minimal. Nevertheless, forging such financial pathways with the UAE, India’s second-largest remittance source, promises fruitful outcomes for both countries.

BRICS Summit: A Pivot to Local Currencies

As the world’s gaze turns to the impending BRICS summit, there’s a buzz around currency discussions. Anil Sooklal, South Africa’s BRICS ambassador, emphasized a focus on local currency promotion rather than de-dollarization. The Johannesburg-based summit will spotlight policies with far-reaching implications for the alliance.

Interestingly, despite members of BRICS progressively distancing from the dollar, the bloc’s focus on local currencies of the Global South remains undeterred. Dismissing notions of BRICS being anti-West, Sooklal highlights their aim: building an inclusive global architecture, representative of the Global South.

Sooklal also touched upon the expansion of BRICS, noting a consensus about the need for the bloc to grow. Details regarding the summit’s specific criteria and procedures remain eagerly awaited by global stakeholders.

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