Reuters exclusively reported that India has requested banks and traders avoid using Chinese yuan to pay for Russian imports, due to long-running political differences with its neighbor. India, a top buyer of Russian oil and discounted coal, would prefer the use of United Arab Emirates dirhams to settle trade. Last year India’s biggest cement producer UltraTech Cement (ULTC.NS) used Chinese yuan for a cargo of Russian coal, which raised some concerns among officials, as the relationship between India and China has deteriorated after deadly border clashes in 2020.
Reuters exclusively reported that India will discourage foreign trade settlement in Chinese yuan
India’s rupee is partially convertible, which means it has to be converted to U.S. dollars first before converting to any other currency, making it an unattractive reserve currency for global central banks and makes Russia reluctant to accept payment in the Indian currency for its exports.