July 23, 2024

India wanted to ditch the US dollar and buy oil in rupees. No seller wanted to get involved.

India rupee money cash

A trader counts new 2,000-rupee notes at a wholesale vegetable market in Bangalore, IndiaAP Photo/Aijaz Rahi

  • India’s efforts to achieve increased international acceptance for its currency are floundering.

  • No oil trades were settled in rupees during the financial year 2022-2023, the Press Trust of India reported.

  • Countries from China to Russia and India have been seeking to rely less on the dollar in global transactions.

India’s campaign to achieve wider international acceptance for its currency isn’t going so well.

The country’s push to pay for crude-oil imports with rupees have hit a wall, with its trade partners remaining reluctant toward the arrangement, the Press Trust of India, a local newswire, reported, citing the Asian nation’s oil ministry.

Global oil suppliers have remained resistant toward receiving rupee payments, citing higher transaction costs and foreign-exchange risks related the Asian currency’s limited global acceptance, according to the report.

No oil imports were settled in rupees during the Indian financial year 2022-2023 that ended in March, the country’s oil ministry told a parliamentary committee, the PTI reported.

India’s push to internationalize the rupee has been seen as part of a wider drive among nations from China to Brazil to reduce their reliance on the dollar in international payments and investments. The movement, known as de-dollarization, gained momentum in recent years as the US leveraged the greenback’s global dominance to slap economic sanctions on countries including Russia and Iran.

China and Russia also have been pushing to increase the global usage of their own currencies, while the BRICS group of nations have been weighing the possibility of a shared tender. More countries have joined the trend this year — Indonesia recently set up a task force to widen the use of its currency, the rupiah.

Last year, India’s central bank allowed local importers to open special overseas bank accounts that would enable making rupee payments to their trading partners.

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