Did you ever think Indians could pay for a commodity like cement in Chinese currency- in your wildest dreams? It’s cement, after all, duh! And aren’t we a major already?
Let’s break it to you.
India’s biggest cement producer, UltraTech Cement, is importing a cargo of Russian coal and paying using the Chinese Yuan – a rare payment method that traders say could become more common. Umm, really?
Bringing in 1,57,000 tonnes of coal from Russian producer SUEK, HDFC Bank-backed Ultratech’s purchase of 172.7 million yuan ($25.74 million).
Rare but inevitable
Hate to admit it, but for India, such payment methods (in the Yuan) could become more common as it seeks to maintain trade ties with Russia, especially for commodities like oil and coal.
New Delhi defends its purchases of Russian products, saying they are legal and that a sudden halt would further inflate prices and hurt consumers.
Greater use of the Yuan to settle payments could help insulate Moscow from punishment. At the same time, it can bolster Beijing’s push to internationalize the Yuan further and undermine the US dollar’s dominance in world trade.
India has also increased scrutiny of Chinese investments and imports and has banned some mobile apps on security grounds.
The Indian government and central bank were aware of possible payments for Russian cargo in the Chinese Yuan. What can we say….
Too long? Here’s a one-liner: Ultra-Tech Cement buys Russian coal and pays via Chinese Yuan, which could become a more common payment mode of trade.