Reserve Bank of India (RBI) comments on rupee settlement for oil imports:
Reserve Bank of India (RBI)
comments on rupee settlement for oil imports:
Reserve
Bank of India (RBI) orders Persian Gulf Oil suppliers from India's major
state-owned refineries to receive at least 10% of oil payments in rupees in
2019 He asked them to persuade him. next fiscal year. The aim of this measure
is to strengthen the position of the Indian currency in the global economy and
reduce the country's dependence on the US dollar.
Government Energy Needs and
Economic Decisions:
India as the world's
representative The
United States is the third largest supplier of crude oil and is expected to
be the main catalyst of global oil growth this year. The US government is
concerned that energy demand in India could weaken the rupee. The Reserve Bank
of India has sought to increase the leadership of the Indian currency in the
global market by capitalizing on progress in consumption.
State producers to tie up with
oil exporters:
Three major state producers -
Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum
Corporation - are close to oil supply exceeding demand for rupee. However,
sellers are experiencing difficulties due to financial risks and concerns about
exchange rates.
The reluctance of oil-exporting
countries to accept the rupee is due to currency fluctuations and related
exchange rates. To solve the problem, the Reserve Bank of India asked Indian
investors to bear some of the foreign exchange expenses. However, refiners are
also waiting with the fear that this will reduce their income.
Dominance of the US Dollar in
World Oil Trade:
A large part of the world oil
trade is carried out in US dollars. Although China has made some progress in
using the yuan for oil imports, the US dollar remains the main currency in
global oil trade.
Historical Examples of Non-US
Dollar Payments:
In August last year, Indian Oil
Corporation paid Abu Dhabi National Oil Corporation a share for the
transportation of 1 million barrels of crude oil in rupees. However, there has
been no similar change in the Indian currency since then. Indian refiners also
use other currencies such as the United Arab Emirates dirham to pay for Russian
crude oil products.
Challenges in the use of rupee:
Adoption of rupee for oil
delivery faces several challenges:
Currency changes: Oil
Exporters are concerned about possible fluctuations in the value of rupee. It
can be devastating. their income.
Foreign exchange fees:
Converting rupees into other currencies will incur additional fees that oil
exporters refuse to accept.
Foreign exchange fees:
Converting rupees into other currencies will incur additional fees that oil
exporters refuse to accept. Refinery resistance: India's state-owned refiners
are cautious about taking on exchange rates, fearing the impact on their
profits.
When limited: While there
are examples of oil imports being paid for in currencies other than the US
dollar, such as the rupee and UAE dirham, these are rare and limited.
Potential benefits of rupee
payment:
Despite the hurdles, the RBI's
push for rupee payment on oil deliveries could bring many benefits: Reduce
dependence on the dollar: by supporting India can reduce its dependence on the
US dollar by using rupees in international trade and could reduce the impact of
the transformation of America's economy.
Strengthening Indian currency:
Increased use of rupee in international markets can strengthen its currency and
improve its international position.
Leveraging India's Energy Growth: As India's energy sector continues to grow, the country can use its market power to negotiate deals, including using its own payment.
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