Ascent of yuan in India's indirect trade with Russia

India’s trade with Russia in yuan is gathering pace as Russian exporters prefer being paid in the Chinese currency, two people close to the matter said. The trades are routed through global financial centres like Singapore and Dubai.

- Ravi Dutta Mishra & Rhik Kundu

Russia’s trade with China hit a record after its invasion of Ukraine, and the Western sanctions that followed redirected much of its energy exports to Asia. While India is yet to set up a smooth payment mechanism with Russia, about 95% of Russia-China trade is settled in rubles and yuan, according to the Russian government.

Russian exporters trading with India through Singapore and Dubai prefer the Chinese currency with greater global acceptance, one of the two people said on condition of anonymity.

The move comes as a setback for India’s attempts to boost the use of rupee in international trade. A payment mechanism India has planned with Russia has failed to take off, as the trade deficit between the two swelled sevenfold in the last fiscal year alone to cross $40 billion.