To strengthen the de-cooperative agenda, India and Russia have signed an agreement to settle oil and gas payments in local currency. The aim was to bypass the US dollar, and in 2022 the contract was intermittently used to use the Rupee event pair. India has even opened a Vostro account of Russian refiners to accept the rupee for the shipment of crude oil. Three years later, neither the rupee nor the ruble would be used for trade, but the new third-party currency, the UAE’s Dirham, benefited from the contract.
The Indian and Russian decoupling plans fail as UAE dirhams are obtained
Since the US tightened sanctions in Russia, Indian refiners have been forced to source Russian oil from UAE traders. The first iteration plan was to use the rupee rate on oil, but India will have to pay the dirham for procurement. The UAE supplier has made it clear that it will accept the US dollar and only Dirham for local currency. And what is the dirham fixed to? It is fixed at 3.67 AED for 1 US dollar.
Thus, the United Arab Emirates and the US dollar benefit from the non-repeat plans hatched by India and Russia. Despite the agreement to use Rupee-Ruble for oil, India is buying not directly with Russia, but through Western Asia-based traders. The two, who are well versed in the issue, spoke to Mint about the conditions of anonymity that India and Russia are working to solve the issue. “We had a payment issue, but it’s now sorted out.” I mentioned someone close to development.
“The ruble is not freely convertible, but the dirham is freely convertible and is directly fixed in the US dollar, making it easier for international trading. Also, as Indian state refiners buy mainly from UAE-based traders, payments are made in dirham. Coming down, “ Sources said it indicates that decooperativeness is declining.
