Asian currencies are more often ‘money of choice’ for Indian companies to pay for Russian coal imports, ditching the US dollar in order to cut the risk of breaching Western sanctions against Russia.
According to customs documents and industry sources, Indian companies are avoiding the US currency by turning to the Chinese yuan and Emirati dirham. Describing the currency as ‘toxic,’ Moscow is also trying to avoid dollar transactions amid US sanctions.
With the South Asian nation switching to non-dollar payments to secure deals from the sanction-hit country, India’s imports of Russian coal increased dramatically in July by more than a fifth to a record 2.06 million tons compared to the previous month, making Russia India’s third-largest coal supplier.
According to an India-based trade source that compiled a summary of deals using customs documents, back in June Indian buyers used currencies other than the American to pay for at least 742,000 tons of Russian coal, which is around 44% of the 1.7 million tons of Russian imports that month.
The reviewed customs documents show that Indian steelmakers and cement manufacturers used the Chinese yuan, the euro, the UAE dirham, and the Hong Kong dollar to purchase Russian coal in recent weeks.
According to data from the trade source, the Hong Kong dollar accounted for 28% of the non-dollar payments for Russian coal last month,
The Chinese yuan totaled 31% while the euro made up under a quarter and the Emirati dirham around one-sixth of the non-dollar payments.
In a move New Delhi expects to further boost bilateral trade with Russia, the Reserve Bank of India approved last month payments for commodities in the Indian rupee. As banks and other parties explore ways of protecting themselves against any further tightening of sanctions, the share of non-dollar transactions for Russian coal is expected to increase significantly.
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