This week India and the United Arab Emirates (UAE) closed their first deal ever without using the US dollar. The deal was made in rupees, India's main currency.
On Monday the two countries settled on an oil trade for India's top refinery made the payment in rupees for a million barrels of oil.
The sale comes after the countries entered a Memorandum of Understanding (MoU) in July. The transaction was facilitated by the Reserve Bank of India and the Central Bank of the United Arab Emirates.
With the MoU, the two countries established the Local Currency Settlement System, which allows the two countries to engage in bilateral trade using both the rupee and the dirham currency of the UAE.
A statement from the Reserve Bank of India said that the MoU will create "seamless cross-border transactions and payments and foster greater economic cooperation" for the two countries.
Between the two countries, bilateral trade has amounted to over $84 billion in between April 2022 and March 2023. The interface of the Reserve Bank of India and the UAE's Instant Payment Platform have also been integrated for the agreement.
This comes as other countries have been suggesting that the United States dollar be dismissed the world reserve currency.
For example, in April 2023, Brazilian President Luiz Inacio Lula da Silva called for abandoning the US dollar over and that the Brics group of nations - which includes Brazil, China, Russia, and India - to come up with their own alternative currency to use.
“Every night I ask myself why all countries have to base their trade on the dollar,” Lula da Silva said in a speech on the topic
Former President Donald Trump appeared in an interview with Fox Business and voiced his concern over the dollar's decline as well.
"We have power but it's waning. In fact, it's waning in terms of our currency," Trump said. "And I'm not just talking about the value of our currency, I'm talking about our currency being used throughout the world."
Although there have been calls to supplant the dollar, it still takes up the majority of foreign exchange reserves in the fourth quarter of 2022 at 58.4 percent. The euro comes in second with 20.5 percent of all reserves.
Source: International Monetary Fund Q1 2022 through Q1 of 2023
The Chinese Yuan, while there have been pushes to supplant the US dollar, only made up 2.7 percent of reserves in the same period.
In quarter one of 2023, there has been a slight increase with 59 percent of the exchange reserves being taken up by the US dollar.
However, the Bric nations, being Brazil, China, India, and others, have not yet launched the currency which would be backed by gold.
