Bye-bye dollar: India & UAE agree to trade in local currencies

New Delhi and Abu Dhabi have inked a currency swap agreement to boost trade and investment without involvement of a third currency like the US dollar.

The swap is for an amount of two billion UAE dirham or 35 billion Indian rupees (US$495 million), according to the Indian Embassy in Abu Dhabi.

“The bilateral currency swap agreement between India and UAE is expected to reduce the dependency on hard currencies like the US dollar,” the embassy said.

Institutional mechanisms guiding the multifaceted cooperation

Two documents signed during the visit of EAM @SushmaSwaraj to #UAE : Agreement on Currency Swap and MoU for Development Cooperation in Africa. Details available at: https://t.co/1PIQwoRqRi pic.twitter.com/Ldq6D19vsc

— Raveesh Kumar (@MEAIndia) December 4, 2018

“It is also expected to give a push for the local currencies of the two nations and may reduce the impact of volatility in exchange rate arising from the dependency on a third currency. It is also expected to reduce the transmission costs arising from exchange rate risk,” the embassy added.

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The sides also discussed cooperation in energy, security, trade, investments, space, defense, and so on.

With more than $50 billion in bilateral trade, the two countries are each other’s largest trade partners. India’s foreign direct investment into the UAE was $6.6 billion in 2017, while the UAE’s investment in India stood at $5.8 billion.

UAE is the sixth-largest oil exporter for India, with non-oil trade between them accounting for $34 billion.

Earlier this year, Abu Dhabi National Oil Company (Adnoc) and an Indian consortium led by the Oil and Natural Gas Corporation (ONGC) signed a 10 percent offshore concession agreement giving Indian companies the opportunity to develop Abu Dhabi’s offshore oilfields, which produce about 1.4 million barrels of oil per day.

Adnoc is also investing in India’s $44 billion Ratnagiri petrochemical complex in cooperation with Saudi Aramco. It is exploring the possibility of storing its crude oil at Indian Strategic Petroleum Reserves Ltd (ISPRL)’s underground oil storage facility at Padur in Karnataka.