There Were Zero Takers for Offers to Pay for Oil in Indian Rupees

Hello BRICS fans, India provides a lesson for what will happen if the BRICS nations ever do launch a currency.

The BRIC Concept

  • Take four countries that have nothing in common (Brazil, Russia, India, and China) assign a label to them, BRIC.
  • Add an S making it BRICS so that South Africa can join the club.
  • Promote the idea of a gold-backed BRICS currency, a trading currency, and a death of the dollar currency. That started in 2010.
  • Add ++ signs to allow anyone to join BRICS++
  • Saudi Arabia, Iran, Ethiopia, Egypt, Argentina and the United Arab Emirates are now in the club.
  • Hooray! Read massive amounts of ridiculous hype on Twitter and alternate media.
  • Yawn

The idea that you can take a group of countries that have nothing in common then keep adding more countries that also have nothing in common, then make some tradable currency out of the mess is more than a bit silly.

India provides a lesson of what it will look like.

No Takers

CNBC reports India Finds No Takers for Rupee Payment for Oil Imports

India’s push for rupee to be used to pay for the import of crude oil has not found any takers as suppliers have expressed concern about the repatriation of funds and high transactional costs, the oil ministry told a parliamentary standing committee.

In a bid to internationalize the Indian currency, the Reserve Bank of India on July 11, 2022, allowed importers to pay with rupees and exporters to be paid in rupees.

Why Would Any Oil Exporter Want Rupees?

Unsurprisingly, none did.

Q: Why would any exporter want a BRICS currency?
A: Other than sanction avoidance, none would.

Yet, the hype goes on and on including talk of a gold-backed yuan and a gold-baked BRICs currency.

Gold-Backed Petro-Yuan Silliness

Flashback October 25, 2017: Gold-Backed Petro-Yuan Silliness

Yuan pricing and clearing of crude oil futures is the “beginning” of a broader strategic push “to support yuan pricing and clearing in commodities futures trading,” Pan Gongsheng, director of the State Administration of Foreign Exchange, said last month.

To support the new benchmark, China has opened more than 6,000 trading accounts for the crude futures contract, Reuters reported in July.


The idea that the yuan will soon replace the dollar as the world’s reserve currency is absurd for currency reasons, political reasons, and economic reasons.

Anyone who suggests otherwise understands neither currencies nor global trade.

Finally, given the implications of the reserve currency curse, I highly doubt China even seeks what these petro-yuan analysts claim.

Assume you are an exporter who wanted gold. Also assume there was a Gold-Backed BRIC (GBB). Would you hold a GBB or would you take payments in dollars and buy gold?

Despite the obvious answer, the stories surface again and again.

More Gold Backed BRIC Currency Silliness on Dethroning the Dollar

On July 7, 2023, I commented More Gold Backed BRIC Currency Silliness on Dethroning the Dollar

To make a currency as good as gold or act like gold it is has to freely float and be convertible on the spot into gold.

Pegs cannot and will not work.

Dollar Weaponization

It’s understandable that nations, especially Russia, want to avoid dollars. There is mistrust for many good reasons.

I discuss the anti-dollar sentiment in Dollar Weaponization Expands – FDIC Message to Foreign Depositors Is Don’t Trust the US

But where is a genuine alternative, that’s liquid, has more trust, and a large supporting bond market.

Trading Currency Silliness

On April 14, I commented Brazil’s President Calls for End to US Dollar Trade Dominance, So What?

The other ridiculous aspect of the BRICS++ venture is the notion of a trading currency to end US dollar dominance.

In general, countries don’t trade, individuals do. The US does not trade with China at all.

For example, US farmers sell wheat to Chinese merchants, and Walmart buys toys from Chinese merchants.

Q: Why would any US farmer want to hold Yuan or a BRICS currency?
A: They don’t and likely never will.

Chinese importers also buy agricultural products from Argentina, Brazil, Australia, and New Zealand. Why would any of those exporters want yuan?

Heck the yuan does not even float. And unlike US treasuries, there is no freely traded, liquid yuan product to invest.

India Frowns on Paying for Russian Oil with Yuan

On October 16, Reuters reported As India Frowns on Paying for Russian Oil with Yuan, Some Payments Held Up.

India emerged as the top importer of Russian seaborne oil this year, with refiners snapping up the crude sold at a discount after some western nations suspended imports from Moscow over its invasion of Ukraine.

Reuters reported in July that Indian refiners began using yuan to pay for some oil from Russian sellers, while continuing to use dollars and dirhams to settle most of their Russian oil purchases.

And, based on comments from officials at affected refiners, payment for at least seven cargoes is still pending. Some payments for recent cargoes delivered to at least two state refiners have been pending since the last week of September.

Two refining sources said settlement in yuan increases their costs, as rupees first need to be converted to Hong Kong dollars and then yuan, a process that costs 2-3% more than settling in dirham.

While Indian state refiners would prefer to use rupees to pay for Russian oil after the country’s central bank last year announced a mechanism to settle foreign trade in rupees, Russia in less keen to accept rupees given as the bilateral trade balance is tilted in Moscow’s favor.

India state-owned-refiners (an example of trades by a country) want to pay in Rupees, but that never happened because Russian exporters do not want Rupees.

A simple question gets to the heart of the problem.

What Would it Take for a BRIC-Based Currency to Succeed?

I discussed the answer on August 25, in What Would it Take for a BRIC-Based Currency to Succeed?

  1. The Brick would need to float freely. The yuan doesn’t.
  2. The Brick have to achieve genuine reserve currency status for widespread use.
  3. A large, liquid Brick-based bond market.
  4. A significant desire by individuals to trade in Bricks and accept Bricks rather than local currencies or the dollar.
  5. Willingness of China to stop export mercantilism.
  6. Relative trust vs the US dollar.

None of those conditions are in place.

Even if the countries concoct a market, the attempt will fail just as India failed at setting up a market to pay for oil with the rupee.

Other than limited cases of sanction avoidance by a small number of individuals, there is little if any desire by individuals outside India to hold Rupees, outside China to hold Yuan, or outside Brazil to hold the Real.

For sanction avoidance and political pandering, there may be a few instances of trade in yuan or Rupees, but until the necessary conditions for genuine success are in place, trade in yuan or BRICS is headed nowhere.

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