German Media: India Uses RMB to Pay for Part of Russian Natural Gas Imports

An article in Frankfurter Rundschau highlights India's new move of using the Chinese yuan (RMB) to pay for part of its imports of Russian natural gas.

Examining the RMB’s Status Through India’s Payment for Russian Gas

The Frankfurter Rundschau article analyzes the reasons behind India’s use of the yuan to pay for part of its Russian natural gas imports.

The article quotes economist Rolf J. Langhammer from Kiel, who explained in an interview with the newspaper’s global economics section: “[For Russia, settling in rubles is as useless as paying former East German exports with East Mark currency.] Russia needs foreign exchange. At the same time, Moscow now holds a growing stock of Indian rupees that are almost unusable on global markets—partly due to India’s large arms purchases from Russia. But Russians need RMB.”

However, just in 2023, India had previously rejected Russia’s proposal to settle payments in yuan. At that time, Russian Foreign Minister Sergei Lavrov complained about the accumulation of billions of rupees in Moscow, calling it a “problem.” As economist Heribert Dieter from Potsdam points out in the article, India currently holds only limited amounts of RMB due to its trade deficit with China. This situation may now indicate that as members of the BRICS bloc, India and Russia might aim to weaken the dominance of the U.S. dollar as a payment currency.

Kiel-based economist Langhammer predicts that in the foreseeable future, the RMB is likely to function “only as a means of payment,” rather than serving as a reserve currency—partly due to China’s capital controls. However, the article notes that “researcher Zongyuan Zoe Liu from the Council on Foreign Relations emphasizes: [Compared to 2009, the most significant change in the internationalization of the RMB lies in its evolution into a key strategic initiative to strengthen the resilience of China’s economy.]”

Original source: toutiao.com/article/1871557593654288/

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