Russia and India are set to start trade in rupees. To increase Indian exports, a new payment system has been approved.
According to the head of the Federation of Indian Export Organizations (FIEO), India will soon begin trading in rupees with Russia. This follows an agreement by the State Bank of India to simplify a new payment system.
“The State Bank of India has come forward for facilitating trade in rupees with Russia and some other banks have also shown interest,” A. Shaktivel told reporters, adding that India already has “a good rupee payment mechanism in Iran, so the same thing will happen [with Russia].”
The Reserve Bank of India, the country’s central bank, published a circular in July pushing national lenders to implement additional measures for rupee import and export operations. The move, which is intended to diminish the rupees’ reliance on the dollar, is also viewed as an incentive to increase commerce with Moscow.
India’s exports to Russia fell by roughly a third between April and July as a result of broad Western sanctions placed on Moscow.
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But according to A. Shaktivel, “The trade in rupees could boost Indian exports to Russia to about $5 billion in the current financial year,” he said.
In order to avoid Western sanctions Indian firms are already using Asian currencies in their dealings with Russia.
Within two weeks, Moscow is anticipated to designate the bank for mutual settlements in rupees. Meanwhile, the Moscow stock exchange is developing a strategy to begin trading in Indian rupee in order to diversify away from the US dollar and euro.