New Delhi: India has asked banks and traders to avoid using Chinese yuan to pay for Russian imports, three government officials involved in policymaking and two banking sources said, due to long-running political differences with its neighbor.
India, which has emerged as a top buyer russian oil Along with subsidized coal, three government officials said the UAE would prefer to use the dirham to settle trade.
One of the government officials directly involved in the matter said that New Delhi is “not comfortable” with foreign trade settled in yuan, but added that “the settlement in dirham is fine.”
The second official said that until the relations between the two countries improve, India cannot allow settlement in Yuan.
Thousands of Indian and Chinese soldiers are locked in a standoff on their disputed Himalayan border since 2021, casting a shadow over the entire relationship.
The five officials did not say whether there were economic reasons behind India’s reluctance to accept the yuan accord.
Last year, India’s biggest cement producer UltraTech Cement used Chinese yuan to pay for a cargo of Russian coal, raising some concerns among officials as India and China clash after a deadly border clash in 2020 in Ladakh’s remote Galwan Valley. Relations have deteriorated.
The second official said the government reviewed the situation with central bank officials and bank officials after the UltraTech deal.
Two banking officials with knowledge of the matter said the Reserve Bank of India (RBI) is not keen on settling foreign trade in yuan, and confirmed that the government has discouraged them from using the currency.
He also said that Russia is keen on yuan settlement as it helps them to buy goods from China.
For Indian refiners who in recent weeks began settling some Russian oil purchases in rubles, as Reuters reported, payments were partially processed by the State Bank of India through its Nostro ruble account in Russia. Is.
But the bulk of trade is still in other currencies as the ruble is partially convertible and the two countries have yet to finalize a framework.
All five officials declined to be named as the discussions were private. India’s Ministry of External Affairs, Finance and the RBI did not respond to requests seeking comment.
The first official said the government expects most payments to Russia in dirhams in the coming months.
India has long had political and security ties with Russia and has refrained from condemning the Ukraine war, which Moscow calls a “special military operation”. India is also a big buyer of Russian arms. Meanwhile, Indian refiners have started paying in dirhams instead of US dollars for most of their Russian oil bought through Dubai-based traders, Reuters reported last month.
India’s rupee is partially convertible, meaning it must be converted to US dollars before it can be converted into any other currency, making it an unattractive reserve currency for global central banks to settle further trade.
It also makes Russia reluctant to accept payment in Indian currency for its exports.
India, which has emerged as a top buyer russian oil Along with subsidized coal, three government officials said the UAE would prefer to use the dirham to settle trade.
One of the government officials directly involved in the matter said that New Delhi is “not comfortable” with foreign trade settled in yuan, but added that “the settlement in dirham is fine.”
The second official said that until the relations between the two countries improve, India cannot allow settlement in Yuan.
Thousands of Indian and Chinese soldiers are locked in a standoff on their disputed Himalayan border since 2021, casting a shadow over the entire relationship.
The five officials did not say whether there were economic reasons behind India’s reluctance to accept the yuan accord.
Last year, India’s biggest cement producer UltraTech Cement used Chinese yuan to pay for a cargo of Russian coal, raising some concerns among officials as India and China clash after a deadly border clash in 2020 in Ladakh’s remote Galwan Valley. Relations have deteriorated.
The second official said the government reviewed the situation with central bank officials and bank officials after the UltraTech deal.
Two banking officials with knowledge of the matter said the Reserve Bank of India (RBI) is not keen on settling foreign trade in yuan, and confirmed that the government has discouraged them from using the currency.
He also said that Russia is keen on yuan settlement as it helps them to buy goods from China.
For Indian refiners who in recent weeks began settling some Russian oil purchases in rubles, as Reuters reported, payments were partially processed by the State Bank of India through its Nostro ruble account in Russia. Is.
But the bulk of trade is still in other currencies as the ruble is partially convertible and the two countries have yet to finalize a framework.
All five officials declined to be named as the discussions were private. India’s Ministry of External Affairs, Finance and the RBI did not respond to requests seeking comment.
The first official said the government expects most payments to Russia in dirhams in the coming months.
India has long had political and security ties with Russia and has refrained from condemning the Ukraine war, which Moscow calls a “special military operation”. India is also a big buyer of Russian arms. Meanwhile, Indian refiners have started paying in dirhams instead of US dollars for most of their Russian oil bought through Dubai-based traders, Reuters reported last month.
India’s rupee is partially convertible, meaning it must be converted to US dollars before it can be converted into any other currency, making it an unattractive reserve currency for global central banks to settle further trade.
It also makes Russia reluctant to accept payment in Indian currency for its exports.
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