India is an exception among these countries that have not participated in the sanctions. As we said in the last program, India has its own unique strategic advantages. First of all, India and Russia have traditional friendly relations, which began in the former Soviet Union, when the Soviet Union even regarded India as a quasi-ally. After the disintegration of the Soviet Union, India still maintained close cooperative relations with Russia and was an important buyer of Russian weapons. If the two countries have close arms cooperation, it shows that the relationship between the two countries is not normal. More importantly, India, as a big country, is also the object of the United States and western countries in the current situation of high political tears in the world. The United States and the West have given India many benefits, of course, most of them are empty promises. I hope that India can abandon the dark and cast a bright light, draw a clear line with Russia, completely fall to the West and join the ranks of Western sanctions against Russia. As a result, I didn't expect India to be unmoved and ignore the repeated lobbying of the West, that is, it refused to condemn Russia. Instead of stopping trade with Russia, it increased its efforts to import Russian discounted oil. If another country does this, maybe the United States and the West will wave sticks to sanction it. Unfortunately, this is India, the most populous country in the world that the United States must win over. By the way, according to the official statistics of India, the population of India has now surpassed that of China, ranking first in the world. Even if India is disobedient, the United States can't help but dare not offend India.
Speaking of India's strategic importance, Indians must thank China. If India had not been involved in containing China, perhaps the United States would have sanctioned Indians long ago. In a word, India imports Russian discounted oil unscrupulously. Now there is a power shortage in India, and there is a problem in coal transportation during the rainy season in China. The Indian government has asked power generation enterprises to ensure that 6.5438+0.9 million tons of coal are imported from overseas before July. Therefore, Russian coal has now become an important target for India's imports. Of course, there must be a discount. Whether you can take advantage of it or not is the first consideration for Third Brother.
However, the problem has also come. Although the United States and the West do not sanction India, it is also a problem for India to buy these discounted energy in Russia. There are trading risks between the dollar and the euro. Many Russian financial institutions are on the sanctions list. Common international currencies, such as USD, EUR, GBP and JPY, cannot be used. Even if they can, Indians are not rich in dollars and euros, so India has been trying to establish a settlement method with Russia before. But it is said that this road is still not smooth, and there are many technical reasons. If you ask me, the main reason is that Indian Rupee's exchange rate is too unstable and the rupee is too unreliable.
Since 2022, India's balance of payments has been deteriorating due to the skyrocketing global energy prices and raw material prices. Coupled with the continuous interest rate hike and appreciation of the US dollar, foreign investors withdrew their funds from the Indian stock market, which led to the devaluation of the rupee against the US dollar. A recent research report released by Bank of America predicts that the exchange rate of the rupee against the US dollar may fall to a record low before the end of this year. Under such circumstances, how can Russian exporters be willing to accept rupees? In addition, Russian imports from India are very limited. Is there anything India can sell to Russia? Iron ore and grain are important export commodities of India, but Russia does not need them. People don't know who to sell to. Why did you buy yours? Other export products of India are some electronic products made in India. These products are all brands of western companies. Because of economic sanctions, it is not allowed to export to Russia, and India also has the final say. What do you think Russians can do with Indian Rupee? In contrast, China and Russia have established a relatively mature RMB ruble settlement and payment system, and using RMB for settlement is a feasible and mature path. Russian enterprises are also willing to accept RMB, because the strong China economy is behind RMB, and it is the first industrial manufacturing industry in China. With RMB, Russia can buy most of the goods it wants from here. At the same time, the RMB exchange rate has been stable for a long time and has the largest foreign exchange reserves in the world. The proportion of RMB in the newly adjusted SDR currency basket has risen to 12.28%, ranking third in the world after the US dollar and the euro.
In the turbulent international trade environment, China still achieved a trade surplus of $300 billion in the first five months of this year, and China maintained a very healthy balance of payments. Therefore, it is the best choice between India and Russia to settle in RMB now, avoiding the dollar and the euro. I believe that the trade between India and Russia will be settled more in RMB in the future.
After the conflict between Russia and Ukraine, the western sanctions against Russia now force those countries that do not participate in the sanctions to choose ways other than the traditional international payment currencies such as the US dollar and the euro. On the whole, RMB may be the most suitable trading currency. If nothing else, the international energy and commodity market prices have risen sharply, and inflation has spread around the world. All countries need to import natural resources products from Russia, a resource-rich country, so the problem of settlement method cannot be avoided. The major western international currencies are all in the ranks of sanctions against Russia without exception. For traders on both sides, the only reliable and acceptable big country currency in the world is RMB.
Of course, the payment method of rupee may be established between Russia and India in the future, but from the perspective of safety, reliability and actual value, RMB settlement may still be the first choice between Russian and Indian traders. A series of chain reactions brought about by the conflict between Russia and Ukraine will inevitably lead to the weakening of the international monetary status of the US dollar and the Euro. This is not the fault of others, but that of the United States and the European Union. It politicizes the ruler of an international wealth, and cannot let others use it at will, and arbitrarily confiscate the wealth saved by others in the form of dollars and euros. The loss of neutrality of the rulers of the dollar and the euro will naturally cause distrust and even panic in all countries of the world. In this case, the RMB, as the legal tender of the second largest economy in the world, is bound to gradually replace the international function of the US dollar under the support of a healthy and stable China economy. From the settlement of coal between Indian enterprises and Russia in RMB this time, we can feel the urgency of this demand from all countries in the world, and we can understand that the internationalization of RMB is accelerating.