Although oil trades have occasionally been resolved in the Chinese yuan, Russian ruble, or Indian rupee, the concept of “de-dollarization” — or shifting away from the U.S. dollar to settle trades in other currencies — is still a long way off.

“I would like to be able to transact everything in rupees. That’s my personal [view],” India’s Oil and Gas Minister Hardeep Singh Puri told CNBC in an exclusive interview on the sidelines of the Business 20 meeting in New Delhi.

He assured the reporters that the U.S. dollar would still be preferred for transactions on international oil markets.

“I don’t know what kind of change [the dollar needs to] be affected but I don’t see it … It’s not so easy.”

In July, Reuters cited sources with firsthand knowledge of the situation to claim that Indian refiners have begun paying for some Russian oil imports in Chinese yuan.

Following the Kremlin’s all-out invasion of Ukraine, Russia was cut off from the SWIFT financial messaging system and subjected to several sanctions. As a result, Moscow and its clients are being pressured to discover payment methods other than the dollar.

The primary global oil currency for many years has been the US dollar, including when India makes purchases.

According to Reuters, China has switched to using the yuan for the majority of its energy purchases from Russia, which in the first quarter of this year surpassed Saudi Arabia to become China’s main oil supplier.

“Some refiners are paying in other currencies like yuan if banks are not willing to settle trade in dollars,” Reuters said, citing an Indian government source.

Additionally, oil has been paid for in Indian rupees. According to Reuters, India Oil Corp, the leading refiner in the nation, paid the United Arab Emirates for a million barrels of oil on August 14.

This comes after the two countries agreed to promote local currencies for cross-border transactions by signing a memorandum of agreement in July.

In April, the Ministry of External Affairs stated that India and Malaysia had begun to settle their commerce in the Indian Rupee. This news was widely covered by Indian media.

Puri was questioned in light of this over whether or not the Indian Rupee might be a part of the de-dollarization trend, particularly in the oil industry.

Not exactly, replied the oil minister.

“The main point is that … there are arrangements, but the transactions which are taking place, how many per cent is coming in rupees?”

Luiz Inácio Lula da Silva, the president of Brazil, said the BRICS nations are still exploring the prospect of a single currency during the BRICS meeting in South Africa. He stated it might “increase our options for [a] means of payment and reduce our vulnerabilities,” according to an official summit translation.

“Does that mean that an alternate global currency has come?” Puri asked.

“We heard about decoupling. But these international arrangements, trading arrangements, payment arrangements, these have been in place for a long time,” he added.

As a result, he believes it will take the Indian rupee a “long journey” to achieve the same level of global importance as the U.S. dollar.

“I wish the Indian rupee should be the lead currency in the world. But I’m also a realist,” he said.  

“I mean, if I ran a $4 trillion economy and 50% of it is in the external sector, then I know that I only have $2 trillion of international transactions, whereas the U.S. and other countries [have more than me].”

(Adapted from CNBC.com)

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