what is the impact of the deal between India and Iran to deal in their own currencies instead of universally accepted USD

Washington has, at many times, used its currency’s wide acceptance as a weapon against countries to hurt their economies. It has done that with China, Pakistan, Middle-east countries and more. And it is currently doing that with Iran by imposing economic sanctions.

In fact, the current deal between India and Iran to use their own currencies instead of universally accepted USD is a result of the same sanction, which has blocked the banking channels for the Persian Gulf Nation. This sanction comes from the Trump Administration to force Tehran to quash its ballistic missile programmes and nuclear ambitions.

At present, Iran is India’s sixth-largest oil supplier. 25 million tonnes of crude oil is expected to be imported to India this fiscal year 2018-19. India will pay for this, in part, with INR, through IDBI and UCO bank, both of which have no exposure to the US financial system. So, the payment is expected to be smooth with less effect in their financial infrastructure in concern to the USA.

Also read: Why is Indian Rupee falling against US Dollar?

This isn’t the first time something like this is happening between India and Iran. Even in 2012, Washington imposed economic sanctions on Iran. And that time, both New Delhi and Tehran had to come up with alternatives, which included a barter system. Iran gave India many items, majorly crude oil, worth of $10.5 billion and India, in exchange, exported items worth $2.4 billion.

So, in all honesty, the deal between India and Iran is a good step toward decentralizing the global economy. It’s a good step to ensure countries do not remain at the helm of USA and hope Washington doesn’t see yet another lunatic President in the next term.

In fact, only recently, India and UAE came to terms to use their own currencies instead of USD in trade. And this independency would be very beneficial for both the countries given both are each other’s largest trading partners.

Hopefully, in the coming days, more and more countries adapt to this model and do away from US dominance in the economy. But then it isn’t so easy. Each country has their own economic challenges. Their currency might not be stable compared to other country’s currency. USD is a clear, stable benchmark that does have many benefits. But I believe we’re at a point in the global front that letting one country dominate the world – a country that’s run by an incompetent leader – is not a very sane idea.