Euro, yen to resolve crude payment row

As settlement in dollars has become difficult due to sanctions imposed against Iran, India and Iran will explore other currencies like the euro, yen and dirham to resolve the stalemate over payment for oil imports at their meeting later this week in Tehran.

An Indian delegation will visit Tehran to resolve the impasse over a mutually acceptable payment mechanism for imported Iranian crude oil.

"The delegation will go on January 14... We have to work out some currency (other than the dollar) in which payments could be made (for Iranian oil),&" Financial Services Secretary R Gopalan said.

Gopalan said the options being considered at present were for settlement in euros, yen or dirham. He added that paying Iranian crude oil consignments in rupees might be difficult, as it is not fully convertible.

The delegation, to be led by Additional Financial Services Secretary Rakesh Singh, would discuss with Iranian officials identifying banks through which transactions could be routed.

The Reserve Bank of India (RBI) had last month said oil payments to Iran could no longer be settled using the Asian Clearing Union, a long-standing clearing house system run by the central banks of nine nations, including India and Iran.

Later, RBI extended the order to all current account trade with Iran. Payment for the Iranian crude in euros is still a possibility, if a certificate is issued guaranteeing the currency is only being used for oil imports.

It was, however, not clear who will give this certificate & mdash; RBI, the bank guaranteeing payment, or the Indian government.