New Delhi: Almost a month after Prime Minister Narendra Modi and the President of UAE Sheikh Mohamed bin Zayed Al Nahyan signed a MoU on having trade in national currencies, Abu Dhabi National Oil Company and Indian Oil Corporation made their first crude oil transaction in national currencies.
The Indian Embassy in Abu Dhabi in a press release said, "The first-ever crude oil transaction under the newly implemented Local Currency Settlement (LCS) system took place on Monday between Indian Oil Corporation (IOC) and (Abu Dhabi National Oil Company (ADNOC). The transaction involved the sale of about 1 million barrels of crude oil. Both Indian Rupees and UAE Dirhams were used for the transaction. "
During his visit to UAE, PM Modi said, "Trade in local currencies is a very important aspect of India-UAE cooperation. It paves the way for enhanced economic collaboration and will make international financial interactions simpler." India and UAE have a strong oil and gas relationship and the UAE is a key partner for India’s energy security. Petroleum and petroleum products form the backbone of bilateral trade between India and the UAE.
The surplus balance in local currencies can be used for investing in local currency assets in corporate bonds, government securities, equity markets, etc. LCS is likely to have a transformational impact not only on the bilateral economic relationship but in larger economic engagements across the world. While today’s oil transaction was the second major transaction under the LCS, the first transaction took place on 15th July, the day of the exchange of the MoU. It involved the sale of 25 kg gold from a leading UAE gold exporter to a buyer in India invoiced at approx 12.84 crore Rupees.
Also Read: PM Modi assures India's full support for UAE's COP-28 presidency
