The partnership between India and the UAE has achieved a remarkable feat by conducting crude oil transactions using their own national currencies. This extraordinary accomplishment is set to strengthen the economic ties between these two countries even more.
The collaboration between India and the UAE has resulted in a groundbreaking achievement. The settlement of crude oil transactions using their individual national currencies. This notable milestone is poised to enhance the economic bond between the two nations even further.
The debut of the Local Currency Settlement (LCS) system marked a collaboration involving the Abu Dhabi National Oil Company (ADNOC) and the Indian Oil Corporation Limited (IOCL). This mechanism enables transactions to take place using both Indian Rupees (INR) and UAE Dirhams (AED) for settlement. The Indian embassy in the UAE underlined that the LCS system’s potential impact transcends bilateral economics and resonates across worldwide economic interactions.
A noteworthy aspect of the LCS mechanism is its versatility, granting traders the ability to collectively determine the payment currency. Furthermore, any surplus funds denominated in local currencies can be channelled into a range of local currency assets, encompassing government securities, corporate bonds, and equity markets. This ingenious approach is on the brink of transforming economic interactions, not only within India and the UAE but also on a larger global spectrum.
This oil trade is not the first instance under the LCS system; an earlier transaction involving gold had taken place. In that initial transaction, a well-known UAE gold exporter sold 25 kg of gold to an Indian buyer, resulting in a total value of approximately Rs 12.84 crore. This successful gold transaction showcased the effectiveness and viability of the LCS mechanism.
You must be logged in to post a comment.
Stay ahead in the dynamic world of trade and commerce with India Business & Trade's weekly newsletter.