India will benefit by trading in INR with Russia alongside other nations,

New Delhi: The Reserve Bank of India (RBI) announced that the use of Indian Rupees is allowed in import and export transactions. Since the Ukraine conflict, nearly a trillion Rupees have reduced the Indian foreign exchange reserves. In this scenario, it will benefit the Indian economy to conduct trades in Indian Rupees. Russia, unable to use USD because of the US sanctions, has started dealing with India in Indian Rupees. Both the countries have benefited from this arrangement, and economists expressed confidence that India will also take the initiative to use the Indian Rupees for trade with other countries.

Earlier, the Indian trade with Iran and Russia had been affected after the United States imposed sanctions against these two countries. It had especially made it difficult for India to pay the bills for Iranian fuels. But after the Ukraine conflict, India and Russia have succeeded in bypassing the US sanctions imposed against Russia regarding the use of USD, with trade being conducted in Indian Rupees. Therefore, India, which was purchasing hardly 0.2% of the total oil imports, significantly increased its oil purchase following the Ukraine conflict.

Thus, Russia now stands second in the list of countries supplying oil to India. According to economists, the option to trade in Indian Rupees with the countries facing US sanctions will be open to India in the coming times. It is said that more than 16% of the total Indian trade is with Russia and the neighbouring countries. This does not include Pakistan. India has the opportunity to convert this into Rupees-based trade. This will save the USDs in the Indian government coffers. Analysts have said that this is the need of the hour.

The Indian Rupee has depreciated along with other currencies, against the USD, since the start of the Ukraine conflict. On Tuesday, the Indian Rupee reached a low of Rs 79.61 against the USD. It is said that the withdrawal of foreign investors and fears of the global recession are causes of the depreciation of the Indian Rupee.

In this situation, if the USD in the government coffers is to be saved, India will have to take the initiative to trade with as many countries as possible in Indian Rupees. India has made the necessary preparations, and the decision announced by the RBI on Monday also seems a part of the same preparations. The RBI announced that the market forces would control the exchange rates for the currencies of the countries. There is a dense possibility of a reaction coming from the United States over this Indian announcement. The United States had warned India not to trade in Rupees-Roubles with Russia.