Russia and BRICS member India are considering the idea of a benchmark rupee-ruble exchange rate to start direct trade in the two currencies, the Economic Times (ET) reported.
Regulators and bankers from both countries are looking for ways to overcome dollar trade barriers caused by Western sanctions on Russia.
The above issue will be discussed during the visit to Russia this week by the Deputy Governor of the Reserve Bank of India (RBI) and senior officials from several Indian state banks.
India and Russia have significantly increased bilateral trade in recent years, especially after Western countries imposed sanctions on Russia due to Moscow's military campaign in Ukraine from 2022. European country Asia has emerged as the second largest buyer of Russian crude oil, after China.
According to the Indian Ministry of Foreign Affairs, the amount of goods imported from Russia to India has increased by about 8,300% since 2021, thanks to "strategic crude oil purchases". Meanwhile, India's exports to Russia increased by 59%.
The RBI recently received feedback from local and Russian banks as well as financial institutions transacting bilateral trade.
Currently, banks that process import and export payments must use the USD exchange rate to convert national currencies. However, with several leading Russian banks banned from the SWIFT international payment system , the scope for currency transactions in USD has decreased significantly.
Payment for the purchase of oil and other imported goods requires the services of major Russian banks. In this context, "markets and exchange rates, as well as rupee-ruble payment systems can provide an alternative to SWIFT" - ET quoted an official in the banking industry as saying.
The rupee-ruble reference exchange rate is likely to be set by the RBI and the Bank of Russia and "adjusted to be in sync with underlying market realities" - a senior banker told ET.
Bank officials will also discuss measures to allow greater use of rupee balances held in special accounts that Russian banks have with their Indian counterparts.
The sums accumulated because rupee payments for Russian imports exceeded India's exports.
According to Bloomberg, Russia has accumulated rupees equivalent to billions of dollars in Indian banks.
Following Russian sanctions , Moscow and its trading partners in Asia began using national currencies for transactions, such as the Chinese yuan and the Russian dirham. United Arab Emirates (UAE).
Russian Foreign Minister Sergei Lavrov said in May that more than 90% of bilateral trade transactions between Moscow and its largest partner, Beijing, are carried out in national currencies.
