India Joins Asian Dollar Exclusion Zone, Will Transact With Iran In Rupees

India Joins Asian Dollar Exclusion Zone, Will Transact With Iran In Rupees (ZeroHedge, Jan. 21, 2012):

Two weeks ago we wrote a post that should have made it all too clear that while the US and Europe continue to pretend that all is well, and they are, somehow, solvent, Asia has been smelling the coffee. To wit: “For anyone wondering how the abandonment of the dollar reserve status would look like we have a Hollow Men reference: not with a bang, but a whimper… Or in this case a whole series of bilateral agreements that quietly seeks to remove the US currency as an intermediate. Such as these: “World’s Second (China) And Third Largest (Japan) Economies To Bypass Dollar, Engage In Direct Currency Trade“, “China, Russia Drop Dollar In Bilateral Trade“, “China And Iran To Bypass Dollar, Plan Oil Barter System“, “India and Japan sign new $15bn currency swap agreement“, and now this: “Iran, Russia Replace Dollar With Rial, Ruble in Trade, Fars Says.”Today we add the latest country to join the Asian dollar exclusion zone: “India and Iran have agreed to settle some of their $12 billion annual oil trade in rupees, a government source said on Friday, resorting to the restricted currency after more than a year of payment problems in the face of fresh, tougher U.S. sanctions.” To summarize: Japan, China, Russia, India and Iran: the countries which together account for the bulk of the world’s productivity and combined are among the biggest explorers and producers of energy. And now they all have partial bilateral arrangements, and all of which will very likely expand their bilateral arrangements to multilateral, courtesy of Obama’s foreign relations stance which by pushing the countries into a corner has forced them to find alternative, USD-exclusive, arrangements. But yes, aside from all of the above, the dollar still is the reserve currency… if only in which to make calculations of how many imaginary money one pays in exchange for imaginary ‘developed world’ collateral.

On India’s induction into the dollar unluck club, from Reuters.

An Indian delegation has been in Tehran this week discussing options for payment and the source said the decision to pay in rupees was made after a meeting there.

“The Central Bank of Iran will open an account with an Indian bank for receiving payment and settling its import,” the source, who has direct knowledge of the matter, said, adding the new system will start “soon”.

The source did not specify the name of the Indian bank. But other sources have said that Iran could open an account with India’s UCO Bank as it does not have any interests in the United States.

Who’s this India country anyway?

India, the world’s fourth-largest oil consumer, relies on Iran for about 12 percent of its imports or 350,000-400,000 barrels per day (bpd) and is Tehran’s second-biggest oil client after China. But Washington has snapped tighter financial sanctions on Iran and wants Asia, Tehran’s biggest oil market, to cut imports in a bid to pressure the Islamic nation to rein in its nuclear ambitions, which it suspects are aimed at making weapons.

And, oh yes, we forgot Turkey -the (lately very pissed off) gateway to Europe.

Turkey and Iran said on Thursday they want to increase financial transfers and that work is underway to strengthen banking ties.

When the dollar fails, and currency are devalued, barter begins:

India Trade Secretary Rahul Khullar said this week that the Indian delegation to Iran would work around the U.S. sanctions to protect oil supplies and promote Indian exports.

The government source said Iran has agreed to step up imports from India which added up to some $2.7 billion in 2010/11 and including oilmeal, rice and tea.

“This will cushion them (Iran) to some extent from exchange rate volatility,” the source said.

Ironically, and as has been stated here many times before, by enacting the proposed sanctions and embargo, the US, but mostly Europe is doing nothing but shooting itself in the foot, as it opens up a brand new pathway of not only outright defiance, and thus political brownie points domestically, of the US, but it will allow it to buy even more crude, at cheaper prices, while in the process it is forced to build closer monetary relations with its neighboring countries, relations that rely less and less on the world’s increasingly less relevant reserve currency.

Asian support for U.S. sanctions is vital since the region buys more than half of Iran’s daily crude exports. The European Union has agreed in principle to halting Iranian crude imports and could finalise the ban on Jan. 23.

China, Iran’s biggest crude customer, has rejected the U.S. sanctions as overstepping the mark and defended its extensive imports from the second-biggest oil producer in OPEC.

Necessity may be the mother of all dollar-exclusive invention, but Obama is surely the father of necessity.

Flashback:

Ron Paul: Sanctions Against Iran Are an ‘Act of War’:

Unwilling to back down from the growing criticism that his foreign policy would be “dangerous,” Ron Paul told voters in Iowa that western sanctions against Iran are “acts of war” that are likely to lead to an actual war.

Paul said that Iran would be justified in responding to sanctions by blocking the Straits of Hormuz, adding that the country blocking the strategically important strait is “so logical” since they have no other recourse.

He then compared the situation to China blocking off the Gulf of Mexico to trade.

President Obama Signs ‘Toughest Yet’ (= Warlike) Iran Sanctions (Which Are Part Of The NDAA) Into Law:

Effectively, the measures will force companies and financial institutions throughout the world to choose between the United States and Iran as their business partner.

2 thoughts on “India Joins Asian Dollar Exclusion Zone, Will Transact With Iran In Rupees

  1. China and Russia signed a similar agreement over a year ago, to use their own currencies and leave out the US dollar. China went on to make the same agreement with Turkey and several South American nations. The US has become a rogue nation like Germany in the 1930s, the entire world is moving away from us. It is no longer if we lose world currency standard, it is when.

    Thanks for another great article totally ignored by corporate media in the USA.
    Sincerely,
    Marilyn Gjerdrum

  2. Why isn’t this front page news? Are the clowns in power so foolish to believe this can be swept under the rug like an alcoholic uncle or aunt? This will affect everyone, not just the US, but the entire world. This explains why the only ones buying US treasuries are the FED and other government entities.

    Our system is so corrupt, and the people running things don’t seem to have the ability to see beyond their own greed. Don’t they understand the fable of the goose that laid the golden eggs? They are killing the goose, there are no more eggs forthcoming. Our entire economy has been gutted, unions now involve less than 8% of all US workers.
    Abe Lincoln said it best & I paraphrase here: The USA will not be destroyed by invasions from abroad but by the vandals within.
    This story makes the establishment of NDAA more understandable. A military police state has been signed into law, and they are staffing those fema camps. Go to the US Army website to apply for employment. Some bad stuff is going to happen soon, and they are preparing for uprising.
    Since we have blackwater troops in every state, and DHS has just given them the contracts to fight the war on drugs…..these cowboys will be visiting all of us soon. Brownshirts. God help us.
    One thing I hear clearly from all sides of the political field, the US is in deep trouble, and nobody is happy with the way our government is being run.
    As ardently as mainstream propaganda works to keep Americans blaming the republicans or democrats or…….people are finally waking up, so here come the brownshirts and the fema camps. People are fed up, but we are a decade too late.

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