New Delhi: According to sources close to the situation, India and Russia have postponed talks to settle bilateral trade in rupees. The two nations have previously discussed shifting bilateral commerce from US dollars to rupees to lessen their reliance on the currency and protect their economy from its swings.
The talks were called off when Russia voiced worry over the rupee’s recent fall, which has lost more than 5% of its value versus the US dollar in recent weeks. According to reports, Russia is unwilling to use the rupee for trade settlement until the currency stabilizes.
The action is a blow for India, which has been attempting to increase the usage of the rupee in foreign commerce to lessen its exposure to global economic volatility. The country has been urging other countries to move to rupee-based transactions to establish a network of trading partners that do not rely on the US dollar.
The termination of discussions with Russia underlines India’s difficulties in persuading other countries to use the rupee for trade settlement. Many countries prefer the US dollar as the global reserve currency because of its stability and liquidity.
India has taken initiatives to encourage using the rupee in foreign commerce, including striking currency exchange arrangements with Japan and the United Arab Emirates. These initiatives, however, have not resulted in a major growth in the usage of the rupee in worldwide trade.
The suspension of talks with Russia also comes at a difficult moment for India’s economy, with growing inflation and a widening trade imbalance. The government is attempting to stabilize its currency and reduce its import reliance. Still, suspending discussions with Russia will likely make this aim more difficult.