India and Russia are planning a return to the rupee-rouble trade arrangement as the two countries step up bilateral trade. The move can also be seen as one aimed at reducing dependence on a volatile dollar for international trade.
"The central banks of the two countries have agreed to hold consultations to study the possibility of using national currency transactions in foreign economic operations between Russia and India," Bank of Russia said in a release.
The two sides are reported to have discussed the issue at the 15th session of the Indo-Russian working group on banking and financial matters in Hyderabad, earlier this month.
The move also comes at a time when the Russian rouble is ruling at a one-year high against the euro and the dollar. Reports also said the Russian central bank is intervening to slow rouble's rise but it does not intent to halt it.
With rouble on the rise aided by firm oil prices and Russia coming out of recession, a return to rupee-rouble trade may only increase India's rupee debt to Russia.
The rupee trade with the former Soviet Union had resulted in India emerging as the biggest trade partner of the pre-split Russian state, with the two-way trade at $5 billion in 1991. It also left India with a rupee debt of around $3 billion to the Russian Federation.
The international reserves of the Russian Federation, the world's third largest, have risen by $4.7 billion to $423.4 billion as of 16 October 2009 from $418.7 billion as of 9 October 2009, the bank said in a separate release.