As part of efforts to reduce the dominance of the US currency in the world markets, known as “de-dollarization”, India scored the last goal against the dollar: the Asian giant officially began trading with the United Arab Emirates (UAE) using national currencies, the Turkish edition Dunya notes.
The historic deal took place on August 14th. India’s leading oil refinery Indian Oil Corp. announced the purchase of one million barrels of oil from the Abu Dhabi National Oil Company, while noting that the purchase was made in local rupees, not dollars. The number was not named.
Experts recall that earlier a UAE gold exporter sold 25 kilograms of gold to an Indian buyer for 128.4 million rupees ($1.5 million), and draw attention to the importance of selling oil, noting: “This is a symbolic deal.” Most commodity transactions around the world are usually paid in US currency.
However, India, the world’s third largest oil importer and consumer, signed an agreement with the UAE last month. The two giants decided to use national currencies in their trade in order to reduce transaction costs.
Since the United States imposed financial sanctions on Russia last year, de-dollarization has gained momentum. The BRICS countries forced transactions using non-dollar currencies. After the start of the Ukrainian conflict, Russia, Iran, Brazil, Argentina and Bangladesh went for broke against the United States, using the Chinese yuan instead of the dollar in trade.
Four Reasons for Dedollarization:
— Over-reliance on a single currency, changes in US monetary policy, and possible US sanctions or restrictions carry risks. In addition, the US government has run a large budget deficit for many years. And this raises concerns about inflation and the value of the dollar.
— The United States has been involved in many geopolitical conflicts in recent years, primarily the wars in Iraq and Afghanistan. These conflicts have resulted in heightened tensions between the US and other countries, making some states less willing to use the dollar.
— China, the world’s second largest economy and an increasingly influential player in world trade, is encouraging the use of its currency as an alternative to the dollar.
— Cryptocurrencies such as bitcoin, which are not subject to government control, have become attractive to those who are looking for an alternative to the dollar.