India, Russia mulling return to rupee-rouble trade

Discussion in 'Economy & Infrastructure' started by 1.44, Oct 27, 2009.

  1. 1.44

    1.44 Member of The Month SEPTEMBER 2009 Senior Member

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    India, Russia mulling return to rupee-rouble trade
    India and Russia are mulling returning to the rupee-rouble trade arrangement to end the dependency on the volatile dollar and step up economic interactions.

    Indo-Russian trade till the demise of the Soviet Union was based on rupee-rouble transactions, which had resulted in India emerging as the biggest trade partner of the former USSR in the developing world with two-way trade to the tune of USD 5 billion in 1991.

    "The Central Banks of the two countries have agreed to hold consultations to study the possibility of using national currencies transactions in foreign economic operations between Russia and India," Bank of Russia said in a release.

    According to the Bank of Russia (Central bank), both sides discussed the issue at the 15th session of Indo-Russian working group on banking and financial matters in Hyderabad earlier this month.

    India, Russia mulling return to rupee-rouble trade- Hindustan Times
     
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  3. Yusuf

    Yusuf GUARDIAN Administrator

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    The dollar is hurting everyone. I can vouch for that as i am an importer. It screwed me big time last year when it jumped from 42 to 50 in span of 3 months.

    Indo Russian trade has been on a downward slide for a long time now. This is a good step to go back to the Rupee Rouble system. But then other issues too remain between the two countries which needs to be resolved to improve trade.
     
  4. bhramos

    bhramos Elite Member Elite Member

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    What is a Big difference?
    how will they convert Rupee into a Rouble currency without use of a dollor?
     
  5. Yusuf

    Yusuf GUARDIAN Administrator

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    Currency conversion problems. Rise and fall of dollar impact. This is the way it was with the erstwhile USSR. At one time we use to have barter trade with them too!!!
     
  6. p2prada

    p2prada Stars and Ambassadors Stars and Ambassadors

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    Brilliant news. This kind of trade is very stable. Also, Russia will be more confident when dealing with the Rupee.

    We will just accept Roubles and Russia will accept Rupees. Simple as that. Dollars, Pounds, Euros etc does not come into the picture.
     
  7. Daredevil

    Daredevil On Vacation! Administrator

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    For that we need to have enough bilateral trade without any large surpluses or deficits on either side. That will be the day we can say goodbye to dollar in Russian and Indian transactions.
     
  8. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    Russians are taking measures to move away from the dollar. They announced that they will converting dollars to the Canadian looney, with Iran they said they will buy oil in Euros and now with India Rupee-rouble trade, this may not seem like anything alarming but if enough nations follow suit it could be damaging to the dollar at one of the worst times in US economic history.
     
  9. ppgj

    ppgj Senior Member Senior Member

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    but how would they be setting the exchange value rate between rouble and rupee? there has to be some benchmark? and will that change wrt the other currency's (dollar, euro) exchange value? if yes, what is the gain?
    or will it be constant irrespective of the other currencies once set?
     
  10. Daredevil

    Daredevil On Vacation! Administrator

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    I think exchange rate will be fixed arbitrarily based on some current common exchange factor like Euro or Dollar and then it shall remain fixed.
     
  11. Yusuf

    Yusuf GUARDIAN Administrator

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    I think we can get better understanding of this if some knows how the system worked on the soviet era. If there is a balance of payment which there will be, how will it be taken care of? Lots of other issues have to be taken care of. If successful I think the chinese will start to push for a similar deal with both Russia and India. They have already sounded India out already.
     
  12. ppgj

    ppgj Senior Member Senior Member

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    agree.

    now that would be interesting. if they do that, dollar will crash impinging on their exports and also the american debt they own. it will be a blow to their economy.
     
  13. Yusuf

    Yusuf GUARDIAN Administrator

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    They have sounded out india on this already a few months back. I think there should be a thread here as well on it.
    A 60 billion trade should not crash the dollar. It will lead the dollar to go down but it won't still lose its pre eminence till the europeans and other developed world countries still use it. I mean india will also have to use it for trade with other countries.
     
  14. ppgj

    ppgj Senior Member Senior Member

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    but it is not the volume of trade i am referring to.
    you know how currency exchange rates/stocks run on a speculative basis.
    the news would be enough to affect the whole thing.
     
  15. Yusuf

    Yusuf GUARDIAN Administrator

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    Would be really interesting that though. Would two countries find enough reasons to tank their reserves for the sake of avoid using thread dollar.
     
  16. sob

    sob Moderator Moderator

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    Just a thought, China has more than a Trillion Dollars tied up in US T-Bills and other US dollar denominated assets. It is in their interest to keep parity between US dollar and Yuan at current levels as it enables them advantages in export to the US.

    Chinese will never do anything to jeopardise the US Dollar. all this is just empty talk of Dollar going down the train. Too many countries including India are linked to the Dollar to let it go down.

    Yususf Bhai with the Dollar going down now you must be a happy man.
     

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