The recent oil trade between India and Russia has been struggling over payment issues, highlighting the importance of currency acceptance and payment methods in international trade. India's attempt to pay for Russian oil in its domestic currency, the rupee, was rejected by Russia, revealing the rupee's limitations in international transactions. In addition, the Indian government has recommended avoiding the use of RMB for payments in favor of UAE dirhams. However, due to Western sanctions, Rosneft was unable to open a bank account in the UAE, leaving Indian buyers unable to pay in dirhams as agreed, resulting in the deal falling through.
This series of events not only highlights India's challenges in the international payment system, but also reflects the importance of currency acceptance in global trade. Against the background of trade imbalances, Russia has accumulated a large amount of rupees in Indian banks, but faces difficulties in using them. In addition, India's harsh measures against Chinese-owned companies could also damage its international business reputation.
India's efforts to internationalize the rupee face significant challenges. Despite the signing of rupee settlement agreements with several countries, global oil suppliers generally refuse to accept rupees, resulting in limited India's influence in international trade. For Russia, sticking to the principle of paying with one hand and delivering with the other has become an effective strategy to avoid payment problems.
The issue of payments in the Indo-Russian oil trade reveals the importance of international currency acceptance and payment methods in global trade, while also showing the complexities and challenges in the international payment system. India's efforts are aimed at boosting the rupee's international standing, but they face a number of obstacles in practice. Russia's response suggests that flexibility and prudence are key in a complex international financial environment.