India's Crypto Hurdle: Ditching US Dollar Proves Challenging

• India's Efforts to Promote Rupee Adoption for International Trade
• Challenges Faced by India in Rupee Adoption
• Impact on BRICS: India's Struggles with Rupee Adoption
• Crude Oil Shipments Paused Amid Currency Conflicts

India's Efforts to Promote Rupee Adoption for International Trade

In an unprecedented move, India, a BRICS member, managed to sway 22 countries to use the Rupee instead of the US dollar in international trade. A diverse mix of countries from Asia, Africa, Latin America, and the global south made up the majority of these adopters. To facilitate this transition, India initiated special Vostro bank accounts to simplify settlements in Rupee. The agreement signed by these nations indicated a desire to trade a portion of goods using the Rupee, thereby reducing their dependence on the US dollar.

Challenges Faced by India in Rupee Adoption

Despite these advances, India has encountered numerous hurdles. Numerous countries are now reluctant to maintain the Rupee as reserves. The currency's diminishing value against the US dollar has deterred its hoarding. The lack of global demand for the Rupee has further weakened its position. As a result, common default currencies include the US dollar, Euro, Pound, Chinese Yuan, Japanese Yen, and UAE's Dirhams. This continues to reinforce the dominance of the US dollar, making the idea of displacing it increasingly unfeasible.

Impact on BRICS: India's Struggles with Rupee Adoption

India's venture into promoting the Rupee has had repercussions within the BRICS community. Notably, its fellow member Russia has put a halt on oil trades due to non-receipt of payments in Chinese Yuan. Russia's stance is clear: while it accepts a portion of the US dollar and Chinese Yuan for settlement, it does not recognize the Rupee. This has led to a delay in a large shipment of Russian Sokol crude oil to the Indian Oil Corp due to currency payment issues.

Crude Oil Shipments Paused Amid Currency Conflicts

The Indian government's lack of interest in using the Chinese Yuan as payment and its recommendation for the IOC to pay in Dirhams instead has further complicated matters. Despite this, Russia remains firm in its stance, insisting on payments in either the US dollar or the Chinese Yuan. This has resulted in an impasse, leading to stalled crude oil shipments. A solution to this currency payment issue needs to be found soon, for the delivery of crude oil to be resumed.

Edited by Jonathan Stoker