- Russia has accumulated billions of rupees that are sitting in Indian banks.
- But Moscow acknowledged that it’s a problem and is looking to convert the rupees to another currency.
- Russia has a trade imbalance with India, which has been a top buyer of Russian energy.
Russia has billions of rupees sitting in Indian banks but acknowledged there’s a problem as it looks for ways to convert that currency.
Foreign Minister Sergei Lavrov noted the widening trade deficit with India, which has been a top buyer of Russian oil since Moscow launched its war on Ukraine last year.
“As for rupees, this is a problem because there are billions of rupees accumulated in accounts at Indian banks and we need to use this money,” Lavrov told reporters in India on Friday. “For this, rupees should be converted into other currencies. This is being discussed.”
The comments come a day after Reuters reported that Russia and India have suspended negotiations over using rupees for trade between the two countries.
Russia prefers to be paid in Chinese yuan, which has become the most-used foreign currency in Russia. Meanwhile, Moscow has reportedly been hesitant about using the rupee due to exchange-rate volatility.
After Russia invaded Ukraine and was essentially ousted from the global financial system, Russia initially encouraged the use of national currencies instead of the US dollar, which is the primary currency for commodities and trade.
Some Indian importers of Russian oil have tried using the UAE’s dirhams and rubles to facilitate transactions.
Still, Russia and India remain deadlocked in a currency dispute that has also frozen weapons sales between the two countries.
India won’t pay Russia in US dollars over concerns that it may face secondary sanctions and won’t pay in rubles because of worries about obtaining Russia’s currency on global markets at a fair rate, sources told Bloomberg last month.
Meanwhile, Russia won’t take Indian rupees because of exchange-rate volatility, the report added. Moscow has also rejected an idea from New Delhi for the Kremlin to invest rupees from arms payments back into Indian capital markets so the currency doesn’t pile up.
Currency concerns with Russia’s currency have also plagued its other trade relations. Recently, it agreed to use the yuan to for payments on a nuclear-power plant deal with Bangladesh, after previously insisting on using its ruble.
