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

Tyler Durden's picture

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 for the likes of China, of the US, but it will allow the "Asian dollar exclusion zone" 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.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
CompassionateFascist's picture

US has no sovereignty vis a vis Israel. A dancing puppet. Obama balking, a little, on Iran...because he senses a catastrophe. Zionists don't care. These people arrange revolutions, world wars, holocausts to get what they want.

Snidley Whipsnae's picture

Baloney. Israel to China is like a gnat to an elephant.

Witness little Timmy's recent trip to China. What happened when Timmy got back? Suddenly the US/Israeli planned war games near the Strait of Hormuz were called off 'for budgetary reasons'... lol

If Israel starts a war with Iran without US backing they will get squished like a bug.

If Israel starts a war with Iran with US backing, Israel gets squished and the US loses it's 'invincible carrier task force' threat; ie, the threat is no longer credible if the US loses some carriers in a scrap with an Iran backed by Russia and China.

Forget war with Iran. No matter how much the neo cons want such a scenario, cooler heads will probably prevail... If not, be prepared for all out nuclear war. Jim Rickards was wrong on this call.

Seer's picture

Perhaps they'd just be happy if we got out of their backyards (quit fucking spawning all those "revolutions")?

Snidley Whipsnae's picture

Seer... Brilliant idea! And, perhaps we could actually try two way meaningful conversation with other soverigns? Diplomacy... Which we have foresaken because we mistakenly believe, like all empires, that the military is the solution to all problems.


pakled's picture

Looking forward to one of those fancy graphics, periodically updated, showing the globe broken down by country, and the currency(s) used to trade between country pairs. Quite a bit of momentum building against the use if USD. When is the tipping point?

ucsbcanuck's picture

We may already be there - China/Japan was the big one.

straightershooter's picture

Any bankers out there in zerohedge?

See, all dollars, except green back printed in paper, are settled and deposited somewhere in New York. By denying access, US has leverage over any bank holding dollars. ( Not a banker myself, so bankers, though, hated, are welcome to comment).

In the same token, all Yens are settled somewhere in Tokyo, and Yuan, somewhere in PeiKing ( or Shanghai), etc. So long as banks do not hold dollars, US, suddenly, has no leverage, and lose the benefit of using the dollars deposited by foreign owners via foreign banks.

With China, Russia, Japan, Korean, etc, etc, entering into bilateral agreement to forgo dollars, suddenly, US loses leverage of serving as the settlement media and all benefit incident to that role. Wondering when Saudi Arabia will enter into a Yuan agreement with China? Then, Saudi prince would import whale suzi from Japan, and pay Yuan to Japan Suzi maker, and then the Japan Suzi maker would pay Yuan to buy rice from China farmer, and then China farmer would buy petro from China oil company, then China oil company would pay Yuan to import oil from Saudi . See, Mom, no dollars. Bankers from New York all jump from imperial tower for  lack of transactions.

YOu don't like YUan. No problem. Saudi prince would import whale suzi from Japan, paying Yen to Japan whale suzi maker, then whale suzi maker would import rice from china, paying Yen to china farmer, china farmer converts Yen to Yuan and buy oils, then china oil company pays Yen to Saudi for buying oil. Where  do China oil companies got the Yen? Glad you ask. China and Japan had a Yuan/Yen swap deal, so anyone in china/Japan can get yuan/yen easily. See, Mom. no dollars. Bankers from New YOrk all jump from imperial tower for lack of transactions.

Once Saudi enters into swap deals with China/Japan/, game over for US. Sanctions all you want, just nobody cares! As for Euro, well,  sanctions all you want, just make sure there will be a euro after the implosion of PIIGS!

akak's picture

I can't argue with your analysis.

Just one question: who is Suzi?

falak pema's picture

suzi wong, famous pole dancer of Macao, you gotta get out of NY Akak, go see the world. She be the new queen of drool on the pole moon beam. Great with her Suzuki bike act!

akak's picture

Actually, I am an entire continent away from New York, a place I cannot even imagine existing (I could not call it "living") in.  And while my remote corner of the USA is perhaps even more removed from the mainstream of American society than is New York City, it is nevertheless far less provincial and navel-gazing.

PMakoi's picture

If you knew Suzi, like I know Suzi...

sorry, couldn't resist that.

Husk-Erzulie's picture

Hi de hi de ho.... Whale Suzi?

Bankers from NY all jump from Imperial Tower?

Hilarious post and likely spot on as well :-)

pakled's picture

OT - This just in


Sinking of Costa Concordia fully explained

Oldest reason in the world. A touch too much bragadoseo trying to impress a female



TerraHertz's picture

He tripped, and found himself in a Moldovan dancer. Could not get out for hours.

CompassionateFascist's picture

Not about bankers. About USN. That's what keeps Saudi's & all other non-nuke powers in line. If we lose IranWar - and there still is a Middle East, or a World - then Saudi's will bolt. Brit Empire actually collapsed when Japs smashed Brit Eastern Fleet off Ceylon, March-April 1942. Mantle passed to US exactly one month later when Adm. Fletcher turned back Japs in Coral Sea, then routed them at Midway. Violence rules, ultimately, not currency.

straightershooter's picture

News from Hong Kong

December 24, 2015

The US NAVY Carrier xxxx from the 7th Fleet was detained by Hong Kong High Court today for not paying the vendors for supplies purchased from Hong Kong. It is reported that local vendors refused to accept US dollars as payment and the US Navy could not secure YUan as payments.

The Hong KOng HIgh court has set a deadline to auction off equipments from the carrier if the US navy could not satisfy the debt before the deadline.

ucsbcanuck's picture

You're thinking about Prince of Wales and Repulse - that happened off the eastern coast of Malaysia (then Malaya)

mc225's picture

apparently there was another battle, near ceylon in april of 1942.

Iam_Silverman's picture

I thought that Commander Adama routed the Cylons.  Were they still causing problems in 1942?

ucsbcanuck's picture

But that didn't really doom the Brits - Prince of Wales and Repulse were worse, because a lot of resources were poured into those 2 battleships and the building of Singapore Naval Base. Plus they lost the commander of the Eastern Fleet. That was the moment the Brits realised that they couldn't defend their empire any more. 


CharlieSDT's picture

If you're going to be a anti-Zionist conspiracy nutcase, at least be a well-researched one, please.

BlackholeDivestment's picture

...who was it that went to the Saudis and told them they need to use the dollar in the first place? ...Oh Henry. Well that worked for a long time. So, you really think military power had something to do with it? Lol. ...or will. Lol.

Snidley Whipsnae's picture

"In 1951, under a mutual defense agreement, the US established a permanent US Military Training Mission in the kingdom and agreed to provide training support in the use of weapons and other security-related services to the Saudi armed forces. The US Army Corps of Engineers assisted in the construction of military installations in the kingdom. This agreement formed the basis of what grew into a longstanding security relationship."

"In the late 1950s, King Saud, the eldest son of King Abdulaziz, came to power after his father’s death. During Saud’s time the US-Saudi relations had faced many obstacles concerning the anti-communism strategy. President Dwight D. Eisenhower’s new anti-Soviet alliance combined most of “the kingdom’s regional rivals and foes”, which rose the Saudi suspicions. (Grayson, 1982). For this reason, in October 1955, Saud had joined the pro-Soviet strategy with Egyptian president Gamal Abdel Nasser (Pollack, 2002). Furthermore, Saud dismissed the US forces and replaced them by Egyptian forces. Thus, this act had sparked and innovated a new and a large conflict in the relationship. But in 1956, during the Suez crisis, Saud began to cooperate with the US again after Eisenhower’s opposition of the Israeli, British, and French plan to seize the canal. Eisenhower opposed the plan because of anti-Soviet purposes, but King Saud had admired the act and decided to start cooperating with the US (Pollack, 2002). As a result Egyptian power greatly declined while US-Saudi relations were simultaneously improving."

US relations with SA are long and complicated. Above are a couple of paragraphs from a very biased and incomplete history of Brit/American relations with SA. Here is the Wiki link for what it's worth...

my puppy for prez's picture

No need to argue....they're both so interconnected now it's hard to see where one picks up and the other leaves off. 

Fiat makes purchase of military might possible....military might makes Fiat domination possible.

On and on it goes...where she stops, nobody knows!

Husk-Erzulie's picture

It usually ends with a punishing military reversal.  The officer ranks of an empire which has long enjoyed dominance become quickly infested with pompous brass polishers and craven careerists.  Meanwhile, some obscure history teacher is studying his Napoleon, Wellington and Sun Tzu.  Brass polishers fumble away entire armies because they have too much to lose, their social position, money, etc.  They have forgotten, or never understood, the Bushido tenet which states ...The warriors true and constant companion must always be death.

Fiat builds mountains of materiel, and oceans of complacency. 

Optimusprime's picture

Great post!  And your final sentence is rhetorically perfect.

falun bong's picture

Sorry, wrong. It is about bankers, and money. That's what gets the fleets and troops there in the first place. You think the military does what it wants, and the bankers follow? Nope, it's the other way around.

Seer's picture

Smedley Butler spelled this out a long time ago (banks are, after all, corporations).

frosty zoom's picture

the whole invasion of afghanistan thingie was to make way for the pipeline (gas and oil) from the caspian the pakistani coast so that india would not fall under the influence of iran (well, its oil and gas!) and get their hydrocarbons from appoved dictators.



TerraHertz's picture

Don't forget the Afghan opium poppy fields. Essential to keep the CIA awash in black funds, doncha know.

cossack55's picture

Are you saying the CIA has spent all the Black Eagle gold already?

Tompooz's picture

Apparently. Now they are resorting to smuggling "fireworks" (Patriot missiles)

frosty zoom's picture

added bonus, essentially.

don't forget the taliban visited sugarland in 98.

took 'em to the beach, they did.


"Last October, the Central Asia Gas Pipeline Consortium (CentGas), in which Unocal holds an interest, was formed to develop a gas pipeline that will link Turkmenistan with markets in Pakistan and possibly India. The proposed 790-mile pipeline will open up new markets for this gas, traveling from Turkmenistan through Afghanistan to Pakistan. The proposed extension would move gas to New Delhi and connect with an existing pipeline. As with the proposed Central Asia oil pipeline, CentGas can not begin construction until an internationally recognized Afghanistan Government is in place. 
The Central Asia and Caspian region is blessed with abundant oil and gas. The impact of these resources on U.S. commercial interests and U.S. foreign policy is significant. Without peaceful settlement of the conflicts in the region, cross-border oil and gas pipelines are not likely to be built. We urge the Administration and the Congress to give strong support to the U.N.-led peace process in Afghanistan. The U.S. government should use its influence to help find solutions to all of the region's conflicts. 
Developing cost-effective export routes for Central Asian resources is a formidable task, but not an impossible one. Unocal and other American companies like it are fully prepared to undertake the job and to make Central Asia once again the crossroads it was in the past. 

"We have the same relationship [the Taliban] as we have with the other factions. We have talked with them, we have briefed them, we have invited them to our headquarters to see what our projects are." 

Source: Testimony of John Maresca (UnoCal), "Hearing on U.S. Interests in the Central Asian Republics," House of Representatives, Subcommittee on Asia and the Pacific, Committee on International Relations, Washington, DC., February 12, 1998 

yogibear's picture

It's about time!! Asia and the Middle East needs to put a stop to Obama  Bernanke and the Federal Reserve's wealth destruction/currency debasement. 

The rest of the world needs to put the fear of god into the US Federal Reserve banksters.

The US has turned into the has-been British Colony. Time for Asia, Middle East and South America to dump US dollars and take away the US reserve curreny status. The US has totally abused the privilage.

The sooner the rest of the world refuses US dollars the better.

Seer's picture

" put a stop to Obama  Bernanke and the Federal Reserve's wealth destruction/currency debasement. "

Bring back GW!

Listen, the "currency" is pure nothing anyway, never WAS.  Even before the Fed it was the target of manipulation.

Everything that's not important (not food, shelter or water) will eventually become pretty much worthless.  And there's not a fucking thing that ANYONE can do about it.  The NATURAL progression has always been driving things, it's just that now the sign posts are too hard to miss (why the Internet is a problem to TPTB).

illadeljim's picture

I hope Obama's Hope team is as smart as I hope. ;) We know Obama has ballz after offing OBL.

DosZap's picture


We know Obama has ballz after offing OBL.

Balls?.................all he did was sit on his ass, and give the ok.

That takes NOTHING.

Caesar  just flips a finger, and its done.


TerraHertz's picture

This January feels like waiting for the 2nd boot to drop.

Hundreds of US Army Tanks on Train in California. Getting ready for World War 3, Martial Law?


Those are very light tanks. No main cannon. The kind of armor that's only useful against people with nothing but small arms. Urban warfare?

Anyone recognize the type? And those trucks in the middle - fuel tankers?

Edit: Better video of same train:

Military equipment train loaded with tanks and other vehicles of war rolls through Morgan Hill, Calif. on Jan. 19, 2012. The train originated in Oxnard and is headed to the Sierra Army Depot in Herlong. This train ran as the UP 7623 SOXHR-17 via the Coast Line.

hero HNL's picture

Those are M2 Bradley APC's & tankers all with euro camoflage. It's standard procedure to travel without 25mm cannon guns. Probably filmed in southern California & ready to go somehere....

The question is where.




Newager23's picture

StaightShooter is absolutely right. This is a big deal (all of these currency agreements). What could bring down our financial system (and with it our economic system), could be these currency agreements. I've always thought it would be the default on our national debt, but these agreements could easily be related to such an outcome.

And I agree with him that Saudi Arabia is the key player. If they start making agreements, we are toast. This is not so far-fetched. What if CHINA demands to deal in yuan? What then? Just a thought. And why won't India ask SA to accept Rupee's?

I find it interesting that the same day that silver bounced, India made this agreement with Iran to deal in Rupee's. Of course it is a coincidence. But it is also an omen. It's an omen that our financial system is falling apart.

This year is going to be very interesting. It sure feels like the dynamics of change are fairly intense. What did those Mayan's know, anyway?





TerraHertz's picture

"This year is going to be very interesting."

And as for US Naval power projection... Russia and India have been cranking the production lines of supersonic, radar-stealthy anti-ship missiles like Yakhont and Brahmos for years now. Stockpiles must be growing quite high. All attacks on carrier groups will be massed wave attacks. The carrier groups will absolutely cease to exist.

Next real shooting war, is when the world will discover that naval sea power is now an obsolete strategic concept. That will changes the global balance rather dramatically.

As for Israel+USA vs Iran, this will be the first time the playground bullies try taking on an opponent who ALSO has DU armaments. The USA military has never fought an opponent without that huge tactical advantage on their side. They probably *cannot* fight effectively without it. What do you think Iran does with all the depleted uranium left over from their entirely legal and legitimate nuclear power fuel refining? All this Zionist wailing about how "Iran nuclear weapons this or that" ... it's rubbish. Iran bought some ex-Soviet nukes back in the mid nineties, and *that* is why it hasn't been attacked by Israel so far.

What utterly freaks out the Zionist military planners, is that Iran will have DU firepower, and so armored attack will be suicide.

Randall Cabot's picture



'Something' Felled An Abrams
Tank In Iraq - But What?

Mystery Behind Aug. 28 Incident Puzzles Army Officials

By John Roos
Army Times

Shortly before dawn on Aug. 28, an M1A1 Abrams tank on routine patrol in Baghdad "was hit by something" that crippled the 69-ton behemoth.

Army officials still are puzzling over what that "something" was. 

According to an unclassified Army report, the mystery projectile punched through the vehicle's skirt and drilled a pencil-sized hole through the hull. The hole was so small that "my little finger will not go into it," the reportís author noted.

The "something" continued into the crew compartment, where it passed through the gunner's seatback, grazed the kidney area of the gunner's flak jacket and finally came to rest after boring a hole 1-1/2 to 2 inches deep in the hull on the far side of the tank.

As it passed through the interior, it hit enough critical components to knock the tank out of action. That made the tank one of only two Abrams disabled by enemy fire during the Iraq war and one of only a handful of "mobility kills" since they first rumbled onto the scene 20 years ago. The other Abrams knocked out this year in Iraq was hit by an RPG-7, a rocket-propelled grenade.

mkkby's picture

Naval power is still extremely important.  However it is stupid to have carriers in the Persian Gulf, just dozens of miles from hostile coastlines on several sides.  Masses of missiles can be launched from those shores, and the ships are like sitting ducks with no warning.  The military leaders know this, so the carriers are likely only there to provoke an attack.

Carriers should be kept far out in open ocean.  There they are protected by their own air cover.

No need for even a single carrier to attack Iran.  The US has huge air bases all over the region.  They can mass troops in Iraq, Afghanistan or Kuwait.  Iran is totally surrounded.

falak pema's picture

Saudi is the key the phrase that holds up the OIL/USD alliance; bedrock of PAx Americana construct. Three thousand Saudi princes and the US Oligarchs are joint and several on this deal. If this line drawn in the sands of Araby, during Operation Desert Storm, the common dipping of swords in the blood of renegade Iraki overlord, now comes assunder, under Chindia's burgeoning and defiant pressure, then yes; the Greenback will tremble.

But do those three thousand princes of tribal bent, want to sever their own commitment to US hegemony on oil and reserve currency? It could boomerang into Armageddon, spell a prolongation of convoluted Arab spring to very heart of Wahhabism. Dire consequences for princes of Islamic Harems, where women stay covered like silent walking tents. Game changer for all medieval lands of Allah o akbar. US Enterprise does carry the ultimate weapon for reprisal against its own surrogates. Like the Kings of Baghdad, Cairo, Tunis and Libya found out. Whose next on this mad rampage? Damascus or Tehran?

But Kismet commands all even those who don't want to fall into the abyssal depths of fiat default. If these SHeikhs who don't rattle and roll feel that the US ENterprise in now like Costa Concordia : on an unavoidable route to the scathing rocks of fiat Scylla, they might be tempted. As Charybdis's looming shadow, mad swirling whirlpool of market vortex, awaits US Enterprise's grinding momentum; to scuttle that gargantuan shuttle and thus bonfire the Everest of fiat. And that, ladies and gentlemen, is a rendez vous with destiny that only the Gods determine, as they laugh and laugh at man's incredible recurrent hubris. Thumbs up or thumbs down? You take your pick, as the sky resounds to the ominous ripple of Jovian ire. 

Lol, awesome stuff; I feel like Shakespeare writing Julius Caesar. Hubris is a contagious disease and I'm not immune to it! 

ha, ha, ha have to laff at my own stupidity dressed up in flowery words. Please suffer and laff with a duffer, on style not substance, which I stand by. 

Savvy's picture

I agree, awesome stuff, excellent rant!! All it needs is Ivan Skavinsky Skavar lol.

falak pema's picture

and, here's the poem of bul bul and ivan !


Good stuff!