Iran and India Oil - Currency Dispute

January 6th, 2011
in News, Background

The Times of India:  Iran is willing to accept payments in rupee for the $12-billion worth of crude it sells to India but the RBI is opposing the idea. This comes at a time when state-run refiners face the risk of running low on their stock of oil next month if a solution to the currency imbroglio is not found quickly.

Follow up:

Government sources on Wednesday said officials of Iran's central bank expressed their vote of confidence in the rupee during their meeting with RBI executives. The Iranians said they were ready to operate through an SBI branch in Mumbai where state oil firms can make rupee payments.

But sources said RBI is against this arrangement on the ground of high trade imbalance between the two countries. Iran imports goods from India worth only $1 billion against the huge amount
New Delhi pays for its oil. Though UN sanctions do not forbid oil imports, the RBI last month settled the payment via a euro-denominated clearing system.

"Strangely, first they (RBI) scrap the clearing system without telling us. Now they are refusing to accept the Iranian offer. How does it matter to us if Iran wants to receive payment in a SBI account in Mumbai... If they use the money to import more, that's good for India. If they invest it in India, it will create more jobs," an oil ministry official said. 
Read more at The Times of India.....

From Sanjeev Kulkarni

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