Moscow and New Delhi suspended work on the transfer of trade between the countries in rupees. reported Reuters cites Indian officials involved in the discussion.
A government source told Reuters that Moscow does not want to stockpile 40 billion rupees, a completely non-convertible currency. Russia may have such an amount because of an imbalance in trade that is in its favour.
Another Indian official noted that Russia wants payments in yuan or other currencies.
A third source told Reuters that New Delhi would likely drop the option of Rs as it failed to establish an efficient and mutually beneficial payment mechanism:
“We no longer want to be pressured to take a decision on the rupee. This mechanism simply does not work. India did its best to make it effective, but nothing helped.”
While it was stated that the parties were looking for alternative payment options in trade, the details were not disclosed.
Reuters writes that the lack of a stable payment mechanism will affect Indian oil and coal importers from Russia, as a permanent payment plan in rupees is important to them to reduce conversion costs.
So far, the parties continue to trade with each other mainly in dollars and partially in UAE dirhams. Also, one of the officials said “third countries are also involved”. Among such third countries, he chose China.
“Third parties are used to regulate trade relations with Russia. There is no ban on trading with other countries via SWIFT. Payments are made to a third country that sent them. [в РФ] Or he makes up for it through his trade with Russia.”
buy currency
On May 2, Bloomberg reported that the Russian Federation may resume buying foreign currency for its reserves, which could be in May. According to him, growth in Russian oil revenues “balances public finances”, so the Ministry of Finance may announce the resumption of foreign exchange purchases as early as this week. The agency assumes that the initial purchase volume will be equivalent to $200 million in yuan per month.
According to the publication, Russia has reduced sales of yuan used to cover the budget deficit in the past two months. However, sales volume in April decreased by half compared to February. Bloomberg named the yuan an asset Moscow uses to conduct transactions for the National Wealth Fund, which is estimated at $154 billion.
The agency’s analysts believe that Moscow will replenish its foreign exchange reserves, emphasizing its ability to consistently provide energy resources in the face of sanctions.
rejection of the dollar
For the past few years, a program of dedollarization of the economy has been discussed in Russia. In 2018, a corresponding plan was presented to the government, providing for the transfer of foreign trade into the Russian ruble and national currencies of other countries. In 2022, the situation escalated after the introduction of anti-Russian sanctions in connection with a special operation in Ukraine, and President Vladimir Putin instructed to implement a new gas payment scheme by opening an account in rubles. Thus, over the past year, the share of the ruble in export settlements in the Russian Federation has increased to 34% (from 12%), and the Chinese yuan – to 16% (from 0.5%).
The countries of the Middle East, Asia and Latin America are most actively moving towards abandoning the dollar: India, China, Brazil, United Arab Emirates, Saudi Arabia and others. Russia has already switched to national currency trade with China, Armenia, Iran and other countries.