In order to avoid using the U.S. dollar and reduce the danger of violating Western sanctions against Moscow, Indian companies are increasingly adopting Asian currencies to pay for Russian coal imports, according to customs documents and industry sources.
The customs data highlight how non-dollar settlements are increasingly common. Reuters previously covered a significant Indian coal deal involving the Chinese yuan.
With imports climbing by more than a fifth from June to a record 2.06 million tonnes, Russia overtook China as India’s third-largest coal supplier in July.
With this decision, the RBI hopes to increase bilateral trade with Russia in its own currency. Payments for commodities may now be made in Indian rupees.
According to traders, the US dollar has been the predominate currency for Indian commodities imports, and the US dollar makes up the majority of the nation’s foreign exchange reserves.
According to a summary of transactions created by an Indian trade source using customs documents and shared with Reuters, Indian buyers paid for at least 742,000 tonnes of Russian coal in June using currencies other than the US dollar. This amount represents 44% of the 1.7 million tonnes of Russian imports during that month.
By analysing ship tracking data, communicating with a private customs agent headquartered in India, and verifying the customs documents for four of the 11 boats in the trade source’s account of Russian coal trades in June, which revealed payments made in yuan, euro, and Emirati dirham.
According to traders, the U.S. dollar has predominated as the currency of choice for Indian imports of commodities, and it accounts for the majority of the nation’s foreign exchange reserves.
Lenders may be required to transmit dollars to bank branches in the country of the originating currency, or to banks with which they have tie-ups, in return for that currency in order to complete transactions in currencies other than the US dollar.
Two trade sources familiar with the transactions confirmed that three additional boats in the 11 trades included in the trader’s report were paid for using the yuan and the Hong Kong dollar.