Rupee-Dirham: On the three-day visit to France and Abu Dhabi, the Modi government signed its first long-term LNG contracts for 0.8 million metric tonnes and 1.2 MMT with French TOTAL in Paris and with UAE’s ADNOC in Abu Dhabi as part of its energy diversification process.
Before this, Qatar held India’s only long-term LNG contract, totaling 11.18 MMT and USD 12 billion yearly. Every year, India imports crude oil from Saudi Arabia worth over USD 30 billion.
The RBI Governor Shaktrikanta Das deserves all the credit for the Rupee-Dirham currency settlement because he did all the grunt work on the Indian side before the MoU was signed with the Central Bank of the UAE. Sheikh Mohammed bin Zayed deserves all the credit because it sends a strong message to the rest of the world about the health of the Indian economy and rupee.
All of the USD 85 billion in bilateral trade, including the USD 36 billion in oil and gas, will now be conducted in local currencies, thanks to the close ties between PM Modi and President MBZ. In the following days, when oil transactions are made using the local currency settlement method, this most recent endeavour will be put to the test.
In addition to integrating the Unified Payments Interface of India and the Instant Payments Platform (IPP) of the UAE, the signing of the MoU on bilateral cooperation on the interlinking of payments and messaging systems (like RTGS and IMPS) between RBI and Central Bank of the UAE will also facilitate interlinking card switches of two countries—Rupay switch and UAESWITCH—to facilitate card transactions directly without relying on any other third-country network.
The LCS system between India and the UAE will have an impact on the entire Middle East as well as the Indian subcontinent because other significant nations want to adopt it. Even though Nepal and Bhutan use Indian currency, Sheikh Hasina’s government believes that the LCS will revolutionise trade with Bangladesh. The LCS eliminates the time-consuming dollar and petro-dollar route and instead links businesspeople and women through local currency for financial transactions.
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