India To Discourage Foreign Trade Settlement In Chinese Yuan

India has asked banks and traders to avoid using Chinese yuan to pay for Russian imports, three government officials involved in policy making and two banking sources said, because of long-running political differences with its neighbour.

India, which has emerged as a top buyer of Russian oil as well as discounted coal, would prefer the use of United Arab Emirates dirhams to settle trade, three government officials said.

One of the government officials directly involved in the matter said New Delhi is “not comfortable” with foreign trade settled in yuan but said settlement in “dirham is okay.”

The second official said that India cannot allow settlement in yuan till the relations between the two countries improve.

Clashes between Indian and Chinese troops at the Line of Actual Control have led to tensions between the two countries.

The five officials did not say whether there were also economic reasons behind India’s reluctance to accept yuan settlement.