Not dollar dependent, Indian importers buy discounted Russian coal with Asian currencies

Reuters reported citing a summary of deals prepared by a trade source based in India using customs documents that Indian buyers paid in other currencies for at least 742,000 tonnes of Russian coal.

This accounted for 44 percent of of the 1.7 million of tonnes of Russian imports that month, the report added.

The buyers include Indian steelmakers and cement manufacturers, who used yuan, United Arab Emirates dirham, Hong Kong dollar, and euro to buycoal from Russia. Of this, 31 percent of the non-U.S. dollar payments for Russian coal in June was made in yuan and the Hong Kong dollar 28 percent, the report said.

Euro constituted one fourth of the payment, while Emirati dirham accounted for one sixth of the money paid.

This is a major shift as most India’s exports transactions, nearly 85 percent, are done in dollars, wherein only 15 percent of exports are meant for US.

Last month, the Reserve Bank of India loosened controls on rupee's use in transactions involving international trade.

In a bid to evade the fallout of US sanctions, India and Russia felt the necessity to find an alternate settlement mechanism for their bilateral trade as dollar payments clear in New York.

They have also agreed to allow the purchase of discounted oil from Russia in rupees, and also for Indian exports to Russia.

Economists in India have called this a clever option amid de facto sanctions on trade with Russia.