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This Indian company Ultra Tech Cement has been reported to be paying for Russian coal imports to India in Chinese Yuan. Ultra tech is Indias biggest cement producer.
This first purchase of coal from Russia being paid for in Yuan is small, yet quite significant. It’s only approximately $26 Million USD.
There are many other companies from multi-national companies, who are now trading in Yuan.
How India Using The Yuan For Trade Affects The Reserve Currency
Obviously this is only a small amount of trade, it’s purely a drop in the bucket, when it comes to the entire amount of international trade that is conducted on a daily basis.
But it’s a move in the wrong direction. If this continues, perhaps America will lose it’s reserve currency status.
The whole point of the United states having their currency fully transferrable, is so that countries like India can use it for international trade.
Over a decade ago, the Chinese Yuan was trialled briefly as a fully transferrable currency too.
This backfired for the Chinese Communist Party, as the equivalent of $1 Trillion USD was moved out of the Chinese economy overnight.
China put a stop to that real quick. So, keep in mind, China needs to solve their capital flight problems way before they even start thinking about becoming the next world reserve currency.
Does India’s Relationship With Russia Threaten Their Quad Status?
It’s interesting how all countries throughout history have made short term decisions that have negatively affected their long term security.
India is clearly not willing to make any sacrifices domestically at all. Sure, keep trading with Russia and keep that relationship alive, but to accept payment in Yuan?
You’d think the country that is famous for IT professionals would have the ability to figure out a way to trade directly with Russia, right?
Surely the Indians can develope their own payment system overnight. Hell, you can even use Bitcoin.
India’s Leadership Has Shown Weakness To China
India has shown such weakness in agreeing to use the Yuan. Instead, a strong Indian leadership would have declined any trade, until it was to be directly with the Russians.
By trading in Yuan, Modi has slightly helped their arch enemy to strengthen their currency.
Modi could be sending gold to Russia for payment, they could use Bitcoin, there are many other ways to pay Russia.
This also shows intellectual laziness on behalf of the Indians. They are clearly living in scarcity and weakness.
Globalization is not dead yet, which means the Indians are not under as much pressure as they will be in the near future. If they cannot handle the heat now, imagine how weak they will be when access to global trade collapses.
This may only be a small issue, but it says so much about India as a country and whether they can be trusted when things become more serious.
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