“Dollar Dethroned? India’s Game-Changing Move Shakes Global Currency Landscape!”
India’s Oil Deal with UAE: Rupees Challenge US Dollar Dominance India and the United Arab Emirates (UAE) have taken a significant step by initiating trade using their respective local currencies. In a notable move, Indian Oil Corp., a major petroleum refiner, recently purchased one million barrels of oil from the Abu Dhabi National Oil Company using Indian rupees instead of the U.S. dollar.
This groundbreaking transaction comes on the heels of another significant deal—a UAE gold exporter sold 25kg of gold to an Indian buyer for approximately 128.4 million rupees ($1.54 million), as reported by Reuters.
The implications of these developments for the U.S. dollar’s global position are noteworthy. Shift towards Local Currencies India had unveiled a new framework last year aimed at settling international trade transactions in rupees. This concept was put into practice recently as India, one of the world’s top oil importers, and the UAE signed two agreements.
Under these agreements, both nations have committed to conducting trade in their own currencies, a strategic move aimed at reducing transaction costs and eliminating the need for dollar conversions. Additionally, they have agreed to establish a real-time payment mechanism to simplify cross-border money transfers.
The Reserve Bank of India highlighted that these agreements will facilitate seamless cross-border transactions, promote economic cooperation, and foster greater collaboration between the two nations.
De-dollarization Trend The shift away from the U.S. dollar is not confined to India and the UAE. Several influential countries, most notably China and Russia, have been actively exploring ways to reduce their reliance on the dollar. This trend, known as “de-dollarization,” has gained momentum due to aggressive U.S. sanctions and foreign policy measures.
This global movement has raised questions about the future dominance of the U.S. dollar. However, Treasury Secretary Janet Yellen has stated that no current currency possesses the capability to fully replace the greenback.
Yellen’s assurance comes as the U.S. dollar experienced an 8% decline in its share of global reserves in 2022. To diversify their holdings, central banks worldwide have started to decrease their dollar reserves in favor of alternative assets like gold.
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