India Russia Rupee Trade: International trade depends on the global currency which is USD but in the recent scenario of Russia Ukraine war, it affects global trade because of Western sanctions on Russia. Russia is unable to use its dollar reserve and SWIFT system for international payments settlements. So Russia and India need the alternative of SWIFT and the Dollar for India-Russia trade. Finally, India and Russia decide to trade into Rupee Rubal in local currency.
Banks in India are permitted to open Special Vostro Accounts of correspondent banks of Russia in order to settle trade transactions with Russia.
The word Vostro is derived from the Latin language, which means ‘yours’, and Nostro, which means ‘ours’.
How rupee ruble trade works?
India and Russia have decided to trade in Rupee-Rubal without using the SWIFT payment system and US dollars. India and Russia trade settlement in rupee ruble 9 Vostro accounts opened by India in Russian banks. UCO and IndusInd Bank opened special Vostro accounts in Russian banks with the permission of RBI.
20 Russian banks have opened special Rupee Vostro accounts in Indian banks for making international trade payments between India and Russia in rupees.
Banks of India will open a Nostro account in Russia and the company of India will pay in rupees for trade in this account. Basically, the bank will be of Russia in which a special rupee Nostro account will be opened by Indian banks. Now Russia will open its account in Indian banks, we will call it the Vostro account and in this, we will receive business payments from Russia.
What are Nostro Accounts?
Nostro accounts are those accounts that are opened in a foreign bank for making payments in local currency. With the help of this account, two countries can make business payments in their local currency. There is no need for a third intermediary currency, such as the dollar or the SWIFT system.
For example, the opening of a special Rupee Nostro account by an Indian bank in a Russian bank.
What are Vostro Accounts?
Vostro means yours. That is, a bank account opened by a foreign bank to make business payments in local currency in a country is called a Vostro account. Like recently special Rupee Vostro accounts have been opened by 20 Russian banks with associate banks in India.
India Russia Rupee Trade 2023
Indian traders no longer need to pay in dollars, now they can pay for trades by depositing rupees into their Vostro account. If Russia imports something from India, then Russia will also not need to pay in dollars because Russia can now pay Ruble to India in the Nostro account. Russia-India rupee trade can remove the problems of sanctions imposed on Russia. Due to this, there is a possibility of strengthening the falling rupees.
Why Indian rupee is rising against dollar?
India Russia rupee trade rising because Western countries imposed sanctions on Russia due to the Russia – Ukraine war. On the other hand, the Government of India is constantly making efforts to strengthen the rupee which has weakened against the dollar. If trade is done in rupees, then it will be possible to make international trade payments without converting rupees to dollars, which can lead to a slight strengthening of the rupee.