The United Arab Emirates and India are holding preliminary talks on non-oil rupee trade, Reuters reports.

The move will build on an agreement signed in 2022 that aims to increase trade between the two countries, excluding oil, to $100 billion by 2027.

Trading in the Indian currency would also mean a sharp shift away from the U.S. dollar, which dominates global commodity markets as well as trade with the Persian Gulf. Saudi Arabia's finance minister this week expressed a willingness to trade in non-dollar currencies.

India and China are among the largest trading partners of oil and gas producers in the Gulf, whose currencies are largely pegged to the dollar.

According to UAE Minister of State for Foreign Trade Thani bin Ahmed Al Zeyoudi, China has also weighed in on trade settlements in local currencies, excluding the dollar, although there is still no progress in these negotiations.

Although trade in the Persian Gulf is mostly conducted in dollars, China and India are increasingly leaning toward using local currencies, citing lower transaction costs.

Western sanctions against Russia, which have frozen Russian assets in foreign currencies, have also highlighted the risks associated with dependence on the dollar.

Russia and Iran are reportedly working together to launch a gold-backed cryptocurrency, with the idea that a stable coin could replace the U.S. dollar for payments in international trade.

Meanwhile, Al Zeyoudi added that in recent months the UAE has become more focused on trade relations with Asia. Discussions are not only with India, but we are conducting them in a way that does not conflict with the general interest of the nation, he said.