Indian merchants use Asian currencies to buy Russian coal

Indian traders have reportedly been settling payments for Russian coal in currencies other than the US dollar, including the Chinese yuan, the Hong Kong dollar, the United Arab Emirates (UAE) dirham and the euro, in an effort to circumvent Western sanctions imposed on Moscow in recent months in response to its latest war with Ukraine, Reuters reported on Wednesday.

Detailing the phenomenon on August 10, the news agency reported:

In June, Indian buyers paid for at least 742,000 tonnes of Russian coal using currencies other than the US dollar, according to a deal summary compiled by an India-based trade source using customs documents and shared with Reuters, equal to 44% of 1, 7 million tons of Russian imports that month.

Indian steel and cement makers have bought Russian coal using the United Arab Emirates dirham, the Hong Kong dollar, the yuan and the euro in recent weeks, according to customs documents reviewed separately by Reuters.

The yuan accounted for 31% of non-US dollar payments for Russian coal in June, and the Hong Kong dollar 28%. The euro accounted for less than a quarter and the Emirati dirham about a sixth, data from the trade source showed.

The news that Indian companies have increasingly bought Russian coal with currencies other than the US dollar comes shortly after the Reserve Bank of India announced on July 11 that it would allow importers and exporters to settle trade in rupees The rupee is best known as the official currency of India. It is also used by other South Asian countries (Pakistan, Nepal, and Sri Lanka) and the Indian Ocean island nations of Seychelles and Mauritius. The Reserve Bank of India’s decision last month to allow settlement in currencies other than the US dollar was expected to facilitate trade between India and other nations, especially Russia.

RYBINSK, RUSSIA - APRIL 19: A view from the Borodinsky Coal Mine, which is an open-pit coal mine, operated by SUEK, producing 22 million tons per year, next to the village of Borodino in the district of Rybinsk of the Krasnoyarsk region, Russia on April 19, 2022. (Photo by Alexander Manzyuk/Anadolu Agency via Getty Images)

A view from the Borodinsky coal mine, which is an open-pit coal mine, operated by SUEK, producing 22 million tons per year, next to the village of Borodino, in the Rybinsk district of the Krasnoyarsk region, Russia, on April 19, 2022. (Photo by Alexander Manzyuk/Anadolu Agency via Getty Images)

“Rupee-denominated sales will be a big, big advantage,” India’s Commerce Secretary BVR Subrahmanyam told reporters on August 2.

“I see in the next two months $8-$9 billion of trade with Russia and Sri Lanka,” he predicted at the time.

“Russia became India’s third-largest supplier of coal in July, with imports rising by more than a fifth compared to June to a record 2.06 million tonnes,” Reuters noted on 10 June. August.

“India has aggressively increased purchases of Russian oil and coal since the war in Ukraine began, helping to shield Moscow from the effects of sanctions and allowing New Delhi to source raw materials at discounts compared to supplies from other countries.” , according to the news. agency.

Washington began imposing sweeping financial sanctions on Russian companies and entities in late February. The US government brought its political allies into the coordinated campaign against Moscow in an effort to punish Russia for launching its latest war with neighboring Ukraine on February 24. The sanctions continue to unfold today and have inspired Asian countries, including India and China, to adopt alternative transaction methods as a means of maintaining business ties with Russian companies.

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