A 12 months in the past, there was palpable pleasure in New Delhi round shopping for Russian crude. The Reserve Bank of India allowed international banks to open special rupee accounts with native lenders to encourage commerce settled in its residence foreign money. Moscow-based Sberbank and VTB Bank had been the primary to come back on board. The thought was that importers would credit score these accounts, whose surplus may very well be invested in Indian authorities bonds.

For sellers of Russia’s flagship Urals crude within the spot market, avoiding greenback clearance meant bypassing the Western banking system and sanctions. Yet, the plan hasn’t actually labored. Russia’s banks are reluctant to build up balances with lenders in India in a non-convertible foreign money that has misplaced half its worth towards the greenback over the previous 15 years. Throw into the calculation an anticipated annual price of three% to 4% foreign money depreciation, and incomes a 7% yield on a 10-year rupee bond does not seem to be such a giant draw.