India not interested in settling foreign trade in Chinese Yuan: report
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New Delhi: India is not ‘comfortable’ in settling trade with Russia in Chinese currency yuan, it would rather go for dirhams of United Arab Emirates.
Sources said that India asked banks and traders not to use Chinese currency to pay for Russian imports, Reuters reported.
The decision comes after India became the top buyer of discounted Russian oil and coal since the Ukraine war.
The long-running political differences that often spills into tension in border made India baulk at the use of Chinese currency.
India is not reportedly ready to allow trade settlement in yuan until the relations between the two countries improve, according to the report.
Troops of both countries often comes to face to face at the border engaging in physical brawls, mounting tension in the area.
Officials who disclosed the matter however are ignorant of any economic reasons behind India’s reluctance to use yuan.
Earlier when India’s leading cement producer Ultra Tech Cement settled its Russian coal imports in yuan reportedly caused some concerns in Delhi.
The government gave thoughts about the use of yuan after the UltraTech deal.
While the Reserve Bank of India (RBI) is against foreign trade settlement in yuan, Russia is keen on yuan as it will help it in purchases of Chinese goods.
Meanwhile, Indian refiners recently settled Russian oil deals in roubles with the State of Bank of India paying through its nostro roubles account in Russia.
The government is looking forward to do most payments to Russia in dirhams in the coming months, according to the report.
Indian rupee has to be converted to dollar first before converting to any other currency, making it ‘unattractive reserve currency for global central banks’.
