India and Russia eye dynamic rupee-rouble rate, vostro balance to bypass dollar trade barriers
Russia are exploring the idea of a dynamic reference rate to start a rupee-rouble market, along with allowing greater deployment of the rupee balance that has accumulated in course of trade between the two countries since outbreak of the Ukraine war.
A reference or exchange rate is aimed at overcoming the dollar trade barriers raised by US sanctions imposed on Russia in February 2022.
These, along with putting in place a payment confirmation mechanism, are expected to figure during a meeting of senior central bank officials and bankers in Moscow this week, two industry persons told ET. The Reserve Bank of India (RBI) recently took feedback from banks and financial institutions dealing with Russian funds registered in India.
Some Russian financial institutions earlier sounded out RBI on a mechanism to let them use rupees lying in special accounts in India for investment in stocks and securities here. There is accumulated rupee balance lying in special, or vostro, accounts that Russian banks have with Indian banks.
This is due to rupee payments for Russian imports exceeding India’s exports to that country.
RBI deputy governor T Rabi Sankar and top officials of some stateowned banks are part of the team visiting Moscow for a meeting of the India-Russia joint business council for banking and finance. Currently, banks handling export-import payments or any capital flows between the two countries have to take the dollar route in converting the currencies. This means carrying out two, almost simultaneous,
