Indian authorities are in advanced discussions with their Russian counterparts over a rupee-ruble exchange system that would enable the two countries to continue trading even as Russia gets blocked from international payments mechanisms. The majority of that trade would be Indian imports of Russian oil. But even though it is trading at a discount to Brent, the price of Russian oil has still risen sharply of late. So it wouldn’t prevent a widening in India’s current account deficit or a rise in inflation. More broadly, an exchange system between India and Russia could attract further ire from the West, particularly if attempts to sanction the energy sector are ramped up.
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