The world is saved: India allows banks to start trading with Russia in rupees.

"NEW DELHI — India’s top foreign trade body said on Tuesday that it had allowed the country’s banks to open accounts to start trading with Russia in Indian rupees, a move that will help India purchase more crude oil at substantial discounts and in turn help Russia fill its coffers more quickly.

Sunil Barthwal, the Indian commerce secretary, told reporters that nine special accounts with two Indian banks had started operating after the country’s top regulators granted permission to facilitate overseas trade with Russia in rupees instead of dollars.

“We want to promote rupee trade because that is in the nation’s interest,” Mr. Barthwal said. “We would also not be looking unnecessarily for dollars. To the extent rupee trade is possible, we will go for it.”

India has leveraged the recent sanctions on Russia to meet its growing energy demand, and the country’s purchase of crude oil has soared since recent sanctions on Russia. Russia recently became India’s top oil supplier, surpassing traditional suppliers like Saudi Arabia and Iraq, according to data from Vortexa, an energy cargo tracking firm.

This new mechanism allows Russian banks to open accounts at Indian banks, so that trade can be settled in India instead of Russia, where because of sanctions, banks are struggling to gain access to foreign reserves. Exporters in both Russia and India will be paid in local currencies using bank accounts set up in both countries, instead of standard international currencies like dollars or euros.

India tried the rupee-ruble payment system with Russia earlier for products like tea, but has never attempted it on a large commercial scale like this. Such a move could help shield trade from sanctions, ultimately benefiting both India and Russia because neither would have to rely on the international banking system.

The timing is significant as well. It comes just after Treasury Secretary Janet Yellen visited New Delhi and as world leaders were gathering in Indonesia for the Group of 20 summit to discuss the recent sanctions on Russia and concerns about a possible global recession.

During the India trip, Ms. Yellen told the Reuters news agency that India could buy all of the oil from Russia it wanted above a set price cap, as long as the purchases did not involve Western insurance, finance or maritime services.

India’s top financial regulator has long been advising banks to allow export and import transactions in rupees.

While addressing world leaders at the G20 on Tuesday, Prime Minister Narendra Modi of India said that there should be no restrictions on energy supplies and that stability in the energy market should be secured."

 

No jump of the oil price in December. No jump in prices of everything at least two times.