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India to pay in euros for Iran oil due to rupee hurdles

05 July 2012 14:10 (UTC +04:00)

Baku â€“ APA-Economics. India is using euros to clear most of its purchases of Iranian oil through a Turkish bank because of hurdles in making rupee payments, according to three people with knowledge of the transactions, APA reports citing Bloomberg.

While some payments have been made in rupees, they are more difficult after India barred Tehran-based Parsian Bank from opening a branch in Mumbai and because the rupee canâ€™t be directly converted overseas to other currencies, the people said, asking not to be identified because the information is confidential.
The euro payments are continuing even as the U.S. and the European Union seek to limit oil revenue in Iran, which they say is developing nuclear weapons. The payments also mean Iran wonâ€™t be handicapped by difficulties in converting rupees, the worst performer among Asian currencies over the past 12 months.

â€œIf the Indian companies need to buy the euro, then this would be a negative for the rupee, especially if the payments are large,â€ said Chin Loo Thio, a senior analyst at BNP Paribas SA in Singapore. India imported about $9.4 billion worth of oil from Iran in the year ended March 2011, according to data from Indiaâ€™s Department of Commerce.