INDIA and the United Arab Emirates (UAE) have officially started trading with each other using their local currencies after Indian Oil Corp., the country’s leading petroleum refiner, used the local rupee to buy one million barrels of oil from the Abu Dhabi National Oil Company.
The move portrayed India and the UAE’s willingness to reduce their reliance on the U.S. dollar as the chief reserve currency.
The US dollar has dominated global trade and financial markets since World War II while the euro followed in its footsteps in 1999.
In the 21st century, the process of de-dollarization has gained even greater momentum with the onset of the trade war between the United States and China.
The rising trend of de-dollarization was driven by concerns about us monetary policy, geopolitical tensions, and the rising use of alternative currencies.
Aside from India and the UAE, other powerful nations like China and Russia – both members of BRICS – are also keen to dethrone the dollar in response to the aggressive U.S. sanctions and foreign policy plays.
Meanwhile, the historic oil transaction using rupees was followed shortly with the sale of 25 kilograms of gold from a UAE gold exporter to a buyer in India for around 128.4 million rupees.
The bilateral trade using local currencies happened a month after both countries agreed to ditch the dollar in favor of the rupee.
