RBI working to provide avenues to Russian trade counterparts for INR use

The Reserve Bank of India (RBI) is working on providing more avenues for the usage of Indian rupee (INR) accumulated by the Russian trade counterparts, a senior official said on Thursday.

The Central Bank is looking at avenues to either settle Indian rupees of Russian trade counterparts lying in India for imports or for making capital investments in India, he added.

“We are working on providing various avenues for using the INR, which is accumulated here by the Russian counterparts, to use it either for settling their imports or making capital investments in India, so on and so forth,” N Senthil Kumar, chief general manager in RBI’s Foreign Exchange Department, said at the Russia-India forum in Mumbai.

For the past few years, both countries have focused on local currencies to settle bilateral trade and reduce reliance on the US Dollar. Last year, the RBI was allowed to invest surplus balances in Government securities.

Kumar noted an “inertia” among stakeholders in transacting in local currencies and added that this needs to be overcome. “There should be some amount of trust which should come for exporters or importers to use local currencies, which will help in increasing the level of transactions which happen in INR,” Kumar added.

Additionally, he nudged for an increase in INR-Rouble transactions.“Unless you do transactions, the market cannot evolve. So, as we keep on doing transactions, as we see that there is a lot of interest in doing INR-Rouble transactions, we will see the market evolve,” he added.