Gold replaces dollar for payment of Iranian oil by India

Gold replaces dollar for payment of Iranian oil
In a bid to finalize the payments with Iran on oil imports, India has decided to pay gold instead of dollars, according to media reports. The step by India has made it first buyer to follow the gold payments instead of dollars.

The industry experts expect China to follow the same route for payments.

Meanwhile, the ongoing dispute over unclear nuclear programme of Iran between US and its allies and Middle East country has created the hurdles for India in the payment of imports of oil from Iran as US and European countries have banned their banks to do transactions for oil shipments from Iran.

Further, India and China both account for almost 40 per cent of Iran's total exports of 2.5 million barrels per day and also possess the huge gold reserves therefore the decision of Indian government to pay in terms of gold is expected to follow by China too.

India purchases oil of worth around USD 12 billion a year, hence according to the new transactions route the payment will be in gold of worth USD 12 billion in a year.

This will led to several calculations in commodity market due to different factors like exchange rates and interest rates associated with gold pricing.

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