India and Russia could not agree on trade in rupees — SMI
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India and Russia have suspended efforts to regulate bilateral trade in rupees. Months of negotiations failed to convince Moscow to accept Indian currency. This is reported by RBC-Ukraine with reference to Reuters.
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A complete failure
This was a serious setback for Indian importers of cheap oil and coal from Russia, who were expecting a permanent payment mechanism in rupees to reduce currency conversion costs.
Moscow believes that due to the large deficit of the trade balance in favor of Russia, the annual surplus of rupees will exceed $40 billion if such a mechanism is developed, and considers that the accumulation of rupees is “undesirable”, said an Indian official.
The rupee is not fully converted. India’s share in world exports of goods is only about 2%, and these factors reduce the need for other countries to hold rupees.
India began to study the mechanism of payments in rupees to Russia shortly after the invasion of Ukraine in February last year, but there were no reports of transactions in rupees. Most trade is done in dollars, but more and more transactions are done in other currencies, such as the UAE dirham.
Both sides talked about facilitating trade in local currencies, but the principles were formalized.
it is inconvenient for Russia to hold rupees, and it wants to be paid in Chinese yuan or other currencies, said the second representative of the Indian government, who participated in the discussions.
“We do not want to promote settlements in rupees anymore, this mechanism simply does not work. India tried everything we could to try to make it work, but it didn’t work,” said a third source.
According to the second Indian official, after Russia’s invasion of Ukraine on February 24 last year, India’s imports from Russia rose to $51.3 billion by April 5 from $10.6 billion in the same period of the previous year.
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Source: Ministry of Finance
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