BRICS: India Refuses To Pay Chinese Yuan for Oil, Prefers US Dollar, Cracks in BRICS, India upset that the Yuan gaining prominence

[beijingwalker]

BRICS: India Refuses To Pay Chinese Yuan for Oil, Prefers US Dollar​

Vinod Dsouza
October 24, 2023

Cracks are developing between the top three BRICS members India, China, and Russia over payment options for Russian crude oil. Leading oil refiners in Russia are demanding developing countries pay in the Chinese Yuan or the Russian Ruble only. While India recently paid the Chinese Yuan to procure oil from Russia, the country is now refusing to put the Yuan ahead of the US dollar. BRICS member India is uncomfortable with paying the Chinese Yuan for oil and prefers to settle trade either in the US dollar or the Rupee.

An executive from the state-run Indian Oil Company (IOC) said that five cargoes have been delayed as India refuses to pay the Chinese Yuan, Bloomberg reported. The three BRICS members are in the crosshairs over currency options and India prefers to pay the US dollar over the Yuan.

India is upset that the Yuan is gaining prominence as Russia and China are using BRICS to further their narrative. The Indian government wants to pay the US dollar, Rupee, or Dirhams for oil and not the Chinese Yuan.

Popularizing the Chinese Yuan at the expense of the Rupee hurts India’s efforts to internationalize its local currency. The Modi government does not want to give the Yuan a boost and aims to strengthen the Rupee first.

India believes that both China and Russia are using BRICS as a stepping stone to make their local currencies stronger. The development puts a wedge in the BRICS bloc as distrust among India and China is growing. BRICS members India and China are at loggerheads over land disputes on the border.

The Modi administration fears that paying in the Chinese Yuan will make the government look weaker during the upcoming elections. Therefore, India is staying away from using the Chinese Yuan as payment and wants to continue in the US dollar.

https://watcher.guru/news/brics-india-refuses-to-pay-chinese-yuan-oil-prefers-us-dollar

 

[epebble]

I don't know much about Chinese Yuan, but if it is a freely convertible currency, what difference does it make? India can pay USD to a bank that will pay Chinese Yuan to Russia. That is why you have money changers. If I have to buy something from U.K., I don't fret, I pay through my Visa card in USD and the merchant gets his money in GBP. That is why there is Citi and Chase. When I went to Japan, All the ATMs happily gave me tons of JPY with my ATM card.

 

[TriptiD]

I don't know much about Chinese Yuan, but if it is a freely convertible currency, what difference does it make? India can pay USD to a bank that will pay Chinese Yuan to Russia. That is why you have money changers. If I have to buy something from U.K., I don't fret, I pay through my Visa card in USD and the merchant gets his money in GBP. That is why there is Citi and Chase. When I went to Japan, All the ATMs happily gave me tons of JPY with my ATM card.

The difference is that, unlike Russia, you are not under international sanctions. The transactions are not so seamless for sanctioned entities. If India pays above $60/barrel for Russian oil, that is a violation of western sanctions and the processing bank could, in principle, freeze the payments.

 

[epebble]

The difference is that, unlike Russia, you are not under international sanctions. The transactions are not so seamless for sanctioned entities. If India pays above $60/barrel for Russian oil, that is a violation of western sanctions and the processing bank could, in principle, freeze the payments.

What has that got to do with which currency is used for transaction? Either the purchase is legal or illegal. It doesn't matter if I buy heroin on the street with USD or Euro or by exchanging with my grandma's wedding band. It is all illegal.

 

[TriptiD]

What has that got to do with which currency is used for transaction? Either the purchase is legal or illegal. It doesn't matter if I buy heroin on the street with USD or Euro or by exchanging with my grandma's wedding band. It is all illegal.

Heroin purchases on the street are typically paid through cash. That is why the vast majority of them manage to escape action by law enforcement. A tanker of Russian oil could be carrying up to 200 million dollars worth of crude. The IOC or other Indian buyers are not going to pay for it in cash, and dollar payment processing typically involves western banks.

 

[beijingwalker]

It seems that Russia doesn't accept either dollar or rupee

 

[firohot4321]

Understandable that India doesn't want to help Chinese influence to increase

Well they also have rubel option for trade what's the issue about that ??

 

[epebble]

Understandable that India doesn't want to help Chinese influence to increase

Well they also have rubel option for trade what's the issue about that ??

When all else fails, we can always return to the 19th century and pay with gold. I have never heard of anyone saying no to that. Any Swiss bank will take any convertible currency and ship you as much bullion as you may need. This baby is only $66,000 and irresistible:

 

[TriptiD]

Understandable that India doesn't want to help Chinese influence to increase

Well they also have rubel option for trade what's the issue about that ??

There is no liquidity in the rouble, especially after western sanctions. Its exchange rate is also very volatile. India will find it difficult to get its hands on roubles and it might come under the scanner of western institutions.

India might try to revive the old ruppe-ruble trade formula but the problem is that oil imports are far exceeding Indian Indian exports to Russia.