India, Russia Plan Monthly Rupee-Ruble Rate to Spur Trade, Cut Costs

• India and Russia are considering a monthly fixed rupee-ruble exchange rate to boost bilateral trade and reduce currency conversion costs.
• The move aims to bypass Western sanctions on Russia, which complicate dollar-based transactions, and deepen local-currency trade.
• Current trade is heavily skewed, with India importing significantly more from Russia, leading to a large accumulation of rupees in Vostro accounts.
• Discussions between RBI and Russia's central bank intensified in 2024, seeking a direct exchange rate not pegged to the dollar.
• Challenges include structural hurdles for companies, payment delays due to sanctions, and some banks' reluctance, despite RBI's efforts to simplify rupee settlement.

Why It Matters: India and Russia are pushing for a direct rupee-ruble exchange to boost trade and navigate sanctions.