Dollar still being used to import Russian oil by Indian companies: Report

Even though it has been months since India started importing oil at discounted rates from Russia, the payment is still being made in the dollar. Russia, however, is inclined to trade in euro or United Arab Emirates dirham. According to a report by Economic Times (ET), Russia is reluctant to shift to the Indian rupee for trade due to the widening trade imbalance between the two countries. 

According to Indian importers, the rupee trade mechanism that was devised in July by the Reserve Bank of India (RBI) has not gained much traction yet. 

"Neither banks nor suppliers are too keen on the rupee payment. Since our exports to Russia are too little compared to our imports, suppliers will be left with too many rupees at hand and they aren't sure what they would do with that," an expert told ET. 

Rising imports from Russia have widened the trade imbalance between the two countries and Indian lenders too have been reluctant to shift to the rupee as they fear that it may attract scrutiny from the US. 

Russia has, however, asked Indian traders to pay in dirham or euro. 

"If we must replace the dollar, it should be the rupee. Why should we strengthen the euro or dirham?, an official told ET. 

They added that the choice of currency is something only the government can decide on.

"The finance ministry has to take a call on which currency would best serve the national interest," they added. 

Payments in US dollars can be blocked by the US but payments in dirham are not considered safe by the industry. According to reports, the US government is looking for ways to block transactions in UAE currency too.