India just bought 1 million barrels of oil using rupees instead of USD

[DeathAngel]

In isolation it’s not a big deal but I really do believe that the mass money printing & abuse of power by the US with the $ as the world reserve currency will be their downfall. We already see with BRICS that countries are willing to take action & look elsewhere. Also bitcoin in the long term is a real threat to traditional currencies & banking.

[Hispo]

In isolation it’s not a big deal but I really do believe that the mass money printing & abuse of power by the US with the $ as the world reserve currency will be their downfall. We already see with BRICS that countries are willing to take action & look elsewhere. Also bitcoin in the long term is a real threat to traditional currencies & banking.

If BRICS wanted to hurt the USA economy that badly, China could do it by dumping much of their USD bonds in the market, and yet Pekin seems to be more interested in getting yield out their bonds in the long term, as they build their own system to face the hegemony of the dollar. I still believe that it will be very difficult to achieve, but not impossible.

It would take all the BRICS members to adopt a second mutual currency in their territories o move onto the Chinese Yuan.

Also, there are altcoins which in my opinion are more suitable as first-layer solution to be a threat to the traditional financial sistema than Bitcoin, because problems of scalability, mostly. Sadly, Bitcoin sounds to be more an asset than a currency nowadays.

[DrBeer]

Historical background:

With the end of the "gold standard" where there was a fixed price for gold and every currency linked to the value of gold, the gold standard was abandoned in 1971, causing a free fall in the value of the dollar and an insane rise in inflation rates, the deal that arose in 1973 between the United States and Saudi Arabia Things returned to normal, and what is known as the petrodollar appeared to us, which includes pricing, trading and recycling of oil and the money generated from it in US dollars only.

I am not trying here to say that the system that created the petrodollar system may come to an end, but some changes have already begun to occur, as the Central Bank of India unveiled a new framework for settling global trade in rupees.

First, the two giants agreed to settle trade in their local currencies — in an effort to cut transaction costs and eliminate dollar conversions. They also agreed to set up a real-time payment link to simplify cross-border money transfers.

The agreements will enable “seamless cross-border transactions and payments, and foster greater economic cooperation,” the Reserve Bank of India explained in a recent statement.

https://finance.yahoo.com/news/dollar-being-dethroned-india-just-201500390.html?guccounter=1

Can we say that trading using local currencies has become an attractive trend, especially with countries beginning to diversify their reserves, or is everything that is happening an attempt to put political pressure on the United States?

One question - and what is the benefit of this deal ?
now the seller does not have 1 million barrels of oil, but has a lot of rupees, the liquidity of which is under great question.
There is another "perfect example" of such deals, and again there India. As you know - India is the biggest buyer of oil from an international terrorist country. And all the deals go through... you guessed it, in Rupees! In the end, only India benefits. But it is not because they are the most cunning, but because the terrorist country has no way out but to sell oil to India for pennies.
Bottom line: India got cheap oil. Russia got a lot of rupees. India refined the oil and made money. Russia... keeps the rupees - since they can't be used anywhere except to buy consumer goods in India. And russia needs the currency to buy necessary goods and technologies in the foreign market. But no one will sell them for rupees. And India has forbidden to exchange these rupees for dollars ) Does he understand the dubiousness of the benefits of working with local currencies ? And you can also model the situation as it was with the yuan - everything was fine, until the crisis began, and the yuan fell in value - what is the benefit of the party that sold for yuan for example 100 million barrels of oil ? Can't a crisis develop in India ? The dollar is more stable because it is "backed" by demand in the world economy....

[arabspaceship123]

That's something they'll discuss because it's going to bring them financial freedom from the dollar. There saying BRICS will introduce their own bank so it doesn't rely on banks which can be used in sanctions against them. One lonely country won't affect dollar's dominance but 11 BRICS countries will.

[spectre71]

[[/quote]

That's actually going to be a very problematic situation for Saudi Arabia, if not a laughable one. Rupees used like mere tokens in an amusement park.

It would have been better if the BRICS nations agreed to use an apolitical, impartial, decentralized network/currency for their international trade needs. If only there was something like it invented, no?
[/quote]

I would have liked to seem them use bitcoin, but I would hate the repercussions of the excuse the US liberal politicians to hate on it. 

[Wind_FURY]

In isolation it’s not a big deal but I really do believe that the mass money printing & abuse of power by the US with the $ as the world reserve currency will be their downfall. We already see with BRICS that countries are willing to take action & look elsewhere. Also bitcoin in the long term is a real threat to traditional currencies & banking.

If BRICS wanted to hurt the USA economy that badly, China could do it by dumping much of their USD bonds in the market, and yet Pekin seems to be more interested in getting yield out their bonds in the long term, as they build their own system to face the hegemony of the dollar. I still believe that it will be very difficult to achieve, but not impossible.

It would take all the BRICS members to adopt a second mutual currency in their territories o move onto the Chinese Yuan.

Also, there are altcoins which in my opinion are more suitable as first-layer solution to be a threat to the traditional financial sistema than Bitcoin, because problems of scalability, mostly. Sadly, Bitcoin sounds to be more an asset than a currency nowadays.

China has aready started to dump U.S. Treasuries, BUT they don't want to do it to make the United States' economy crash. Why would you do that to the largest customer of Chinese exports. Hurting the U.S. would probably hurt them more.

Plus as the U.S. Dollar becomes more scarce because of the Federal Reserve's tightening and the restriction of swap lines, China will truly want to sell some bonds for their Dollar needs. The U.S. would be more than happy to turn the money printer on and buy all of them at the right time, and let them hold more Dollars.

[be.open]

This recent development should be troubling to the US but they are dismissing it as if nothing is happening. It is getting to a very critical point when they will lose total control. But even now I wonder what is it they can do. India and the UAE are both members of the BRICS. The process has started of replacing the dollar as the world reserve currency to multiple currencies.

Lol. How dumb are you? It's pretty damn evident that you have issues with the USA which is why you are stating such nonsensical stuff. Process of replacing the dollar? Extremely silly statement.

The dollar is actually growing stronger with time while the rupee is growing weaker. Think hard!

All fiat currencies weaken over time, some faster, some slower. If the rate of weakening of the fiat currency is not too fast, it is quite suitable for settlements for exported goods on one simple condition - if you intend to import goods or services for an equivalent amount. This is how bilateral currency swaps in national currencies work, which are practiced between BRICS member countries. The exchange rates of national currencies are temporarily frozen and a bilateral transaction takes place. If there is no significant imbalance in the trade balance between countries, then everything goes smoothly even without the participation of the dollar.

I will explain with an example. Let's say India wants to buy a million barrels of oil from the UAE and pay for them in Indian rupees. UAE Indian rupees are not particularly needed because it is not a freely convertible currency. But India can offer goods or services for an equivalent amount in return. In fact, the transaction turns into a barter one, where fiat currencies are involved only for the convenience of mutual settlements, but are not used as a store of value. In particular, India can offer in return some medicines or outsourced programming services or something else.

That's actually going to be a very problematic situation for Saudi Arabia, if not a laughable one. Rupees used like mere tokens in an amusement park.

I don't see anything problematic, let alone laughable, in this situation. What could be wrong with the development of balanced bilateral trade relations between the two countries? India exports offshore programming services every year for what seems to be about $400 billion, why not trade some of that for a million barrels of oil from Saudi Arabia, or does Saudi Arabia need programming services at all? I think that Saudi Arabia is still buying them, just paying for it with US dollars, which it receives for the sale of its oil. Why is the US dollar in this scheme, is it not an extra link that only imposes a few percent of additional overhead on conversion and does not carry any useful semantic load?

It would have been better if the BRICS nations agreed to use an apolitical, impartial, decentralized network/currency for their international trade needs. If only there was something like it invented, no?

It's too hard to implement. Theoretically, it would be possible to use bitcoin for these purposes, and there is a certain economic sense in this, but the governments of the BRICS countries are unlikely to take this step for political reasons.

[DrBeer]

While some in this world are engaged in "mental masturbation" (I apologize, but it's hard to characterize this mental anguish any other way ), in anticipation of "the dollar is no longer a currency", pragmatic China is increasing US government obligations. The information is in open sources! And one participant of this topic, trying to prove the opposite, published it, but published only the part that was favorable to him, hoping that no one will look at the real, complete picture So it shows that China is currently buying U.S. government bonds, and has reached the pre-covidian level ...
And pragmatic India even states: the dominance of the dollar will continue
"One of the member countries of the BRICS bloc - India - so far sees no reason why the process of dedollarization will expand and strengthen, writes Business Insider.

The country's oil and gas minister admittedly would like to see the Indian rupee become the world's leading currency, but he is a realist and does not yet see such a prospect as a realistic possibility.

The dollar is still the dominant form of payment for commodities such as oil, although India's refineries have used Chinese yuan to buy Russian oil and rupees to buy oil from the UAE."
https://ru.investing.com/news/forex-news/article-2287576

PS This is great news, and again proves that a terrorist country does not get VALUE (liquid currency) for its resources, no matter what prices in dollars they draw, for self-indulgence

[arabspaceship123]

We don't know what it's going to look like in another 5 years. I wouldn't find it shocking if BRICS became a serious challenger to the G20. They've said they'll consider a BRICS Bank but adding a decentralised currency isn't in their vision. BRICS's evolving so we don't now about what they'll do tomorrow.

It would have been better if the BRICS nations agreed to use an apolitical, impartial, decentralized network/currency for their international trade needs. If only there was something like it invented, no?

It's too hard to implement. Theoretically, it would be possible to use bitcoin for these purposes, and there is a certain economic sense in this, but the governments of the BRICS countries are unlikely to take this step for political reasons.

[Franctoshi]

The currency war continues, and a couple of things have happened recently Basically the high inflation rate as a result of money printing has caused several economies of the world to tank, thereby causing the high cost of petrol and skyrocketing food prices, bank runs, and due to the sections placed on Russia because of the Russian invasion of Ukraine, which has resulted in the rise of brick nations to seek alternative means which India is among, therefore I do see this move by India as to further solidify their move away from their dependency on the United States dollar hegemony.

[Gyfts]

Can we say that trading using local currencies has become an attractive trend, especially with countries beginning to diversify their reserves, or is everything that is happening an attempt to put political pressure on the United States?

Trading in local currency is only beneficial to the country that's issuing out their own currency. It's a trend as of late only because USD would normally be the intermediary currency, but for sanctions on Russia and a high inflation rate.

Even countries outside of BRICS are dumping USD from their reserves and trading through alternatives.

[DrBeer]

Can we say that trading using local currencies has become an attractive trend, especially with countries beginning to diversify their reserves, or is everything that is happening an attempt to put political pressure on the United States?

Trading in local currency is only beneficial to the country that's issuing out their own currency. It's a trend as of late only because USD would normally be the intermediary currency, but for sanctions on Russia and a high inflation rate.

Even countries outside of BRICS are dumping USD from their reserves and trading through alternatives.

India and China do not buy oil from the country of the terrorist for dollars, which Russia so wants to get. India buys oil for rupees, China for Yuan. The question is - what can Russia do with this pile of papers? The beneficiaries are only India and China in these transactions.
India then processes cheap oil into a finished product and sells it to other countries, already for foreign currency!
China - stupidly cheaply buys resources from Russia, exporting its yuan to them, to save its economy.
That's all "friendship"! Russia in this situation is a cheap, submissive, raw material appendage ... As they say, "nothing personal - only business"

[arabspaceship123]

India hasn't shown solid determination it wants to break away from the dollar. One country can't break away from the dollar it's going to take willing partners to trade using their own currencies. I don't see this as news it won't lead to changes in international deals.

The currency war continues, and a couple of things have happened recently Basically the high inflation rate as a result of money printing has caused several economies of the world to tank, thereby causing the high cost of petrol and skyrocketing food prices, bank runs, and due to the sections placed on Russia because of the Russian invasion of Ukraine, which has resulted in the rise of brick nations to seek alternative means which India is among, therefore I do see this move by India as to further solidify their move away from their dependency on the United States dollar hegemony.

[Unbunplease]

Of course, it cannot be denied that over time the dollar will be used less and less in calculations, but as long as our generation lives, we will still recalculate prices in dollars out of habit. Personally, I do it automatically. But even for this reason, it is unlikely that it will be possible to completely abandon the dollar. It's like Don Quixote fighting windmills.

[alastantiger]

Nothing will happen to the US dollar, and that is why the leaders over there are not doing anything. If there is anything that is going to happen to the dollar, it will take many years before we witness another currency challenging the entrenched supremacy of the US dollar in international trade. I understand that these countries want to reduce reliance on the US dollar, which I support. I believe that we should have more than one option for international trade. If the BRICS currency later comes into existence, it should be able to be used side by side with the dollar and not as a substitute for it.

[arabspaceship123]

It's one of the posts that's making sense in this thread. If it's created it'll be used by 11 BRICS countries as national currency so over time it's going to give options for trade. We don't know if they'll create BRICS currency but it's going to take years. Replacing the dollar won't be an option for a long time.

Nothing will happen to the US dollar, and that is why the leaders over there are not doing anything. If there is anything that is going to happen to the dollar, it will take many years before we witness another currency challenging the entrenched supremacy of the US dollar in international trade. I understand that these countries want to reduce reliance on the US dollar, which I support. I believe that we should have more than one option for international trade. If the BRICS currency later comes into existence, it should be able to be used side by side with the dollar and not as a substitute for it.

[dothebeats]

Truth be told, this is big news with the ongoing discussion and circumstances surrounding Russia. However, I don't think it will have a definite effect on USD. Despite the oil trade being made using rupees, USD will still maintain its prominence in the market. It will take years for rupees to make the same prominence as the USD have in the world and that is the reality of it. In fact according to the Investopedia article published in September 2022, since after the Russian invasion of Ukraine last year USD has been strengthening in comparison to other world currencies even when the price of oil catapulted.

Moreover, even Hardeep Singh Puri, India’s Oil and Gas Minister, stated in his recent interview with CNBC that it will take a long time for rupees to even have the same power as USD has and that is the reality of it. He also added that international payment systems have been running for such a long time that displacing USD will be not as easy as a lot of people think.

For further information about the mentioned article and interview, here are the links:
Article: https://www.investopedia.com/articles/forex/092415/oil-currencies-understanding-their-correlation.asp
Interview: https://www.cnbc.com/2023/08/25/de-dollarization-a-long-way-off-india-oil-minister-hardeep-singh-puri.html

[Darker45]

It's probably more of growing independent from a currency that isn't theirs to begin with. Why use a foreign currency when they have their own?

However, this can't be brushed off as far as its effects to the USD is concerned. The petrodollar story has some truth. Countries need to have the USD because it's the only currency which they can use to buy oil from certain oil-producing countries. The global demand for the USD is therefore high. But what if buying oil won't have to use the USD? It will certainly have an impact.

[ancafe]

I am not trying here to say that the system that created the petrodollar system may come to an end, but some changes have already begun to occur, as the Central Bank of India unveiled a new framework for settling global trade in rupees.

I also don't want to say that the petrodollar system will end in time because that is unlikely to happen and so far the dominance of the dollar is still quite difficult to match. If indeed the Central Bank of India has a new framework for global trade wouldn't that be great for your country? But the question is what about countries that have trade agreements whether they agree to purchase any product using the currency of the buying country.

Can we say that trading using local currencies has become an attractive trend, especially with countries beginning to diversify their reserves, or is everything that is happening an attempt to put political pressure on the United States?

This is not about being attractive or not but using local currency to buy goods in global trade can increase value and the buying country does not need to exchange the value of local currency to dollars to buy anything so it helps increase the strength of local currency. You could say this is political pressure that several countries are trying to exert on the United States and has been carried out by the BRICS countries if I'm not mistaken.

[Argoo]

it seems that more people will leave USD. In this current situation of the world, use local currency and reduce the usage of USD bring too many good things to each country. I have learned about export and import, in the past people really like to use USD for their transaction because when the price of USD rise then this will give extra profit for the exporters. But now many things has changed, maybe reduce the usage of USD is the best thing to do.

In order to pay with the national currency in transactions for large amounts, it is necessary that there be a good reverse trade turnover between these two countries. That is, in this case, the UAE should be able to spend Indian rupees, purchasing in India or other countries the goods necessary for the UAE in the same volumes for rupees. Otherwise, the UAE will suffer losses from such trade in rupees, as happened with Russia. Russia is now selling its oil at deep discounts to India for rupees, but doesn't know what to do with it.
The dollar, as the world's reserve currency, has no such problems.