What are the reasons behind Indian refineries beginning to pay for Russian oil in Chinese yuan?

When the U.S. saw India acting so proactively, it thought, 'This public sentiment is usable!' and urged India—the so-called 'big brother'—to step up. Recently, as the renminbi (RMB) has been pushing for internationalization, the U.S. has grown increasingly wary of this development. India then patted the U.S. on the shoulder and said, 'Big brother, don’t worry—I’ll help block RMB internationalization.' India proceeded to persuade the U.S.: 'First, big brother, look—since the Russia-Ukraine conflict erupted, many countries have realized the U.S. dollar isn’t safe. That’s an objective fact, right? There’s no flaw in that argument.' The U.S. replied, 'Yes, indeed—it’s become somewhat unsafe. Sigh… I’m left with no choice but to overdraw on my future credibility, since I currently hold no strong cards!' India continued: 'So, big brother, we must prepare early to counter RMB internationalization.' The U.S., nodding thoughtfully, conceded, 'That makes sense—we should indeed prepare ahead of time.' Then India kept going: 'But how do we prepare? Precisely by filling the vacuum left when the dollar steps back—so the RMB won’t get a chance to fill that gap!' After some reflection, the U.S. agreed: 'True. Better you occupy that space than let China seize it.' Then, suddenly shifting tone, India added: 'Big brother, there’s one issue now: After you partially withdraw from certain areas, those vacated zones—if I’m to fill them, won’t I need to push for rupee internationalization? To expand our own currency’s reach?' India quickly followed up: 'Big brother, please don’t misunderstand—I’m doing all this solely for your grand anti-China strategy. This is sacrifice for the team, absolutely no personal agenda!' The U.S., weighing priorities, concluded: 'Right now, containing China is our top goal—so if you’re doing it, fine. I’ll just turn a blind eye.' India then declared: 'Got it, big brother—I’m off to begin!' This is where India’s shrewdness lies: It constantly signals cooperation with the U.S. and participates in anti-China frameworks—but every subsequent move strikes directly at the U.S.’s core interests. According to Global Times: In July 2022, the Reserve Bank of India (RBI) launched a trade settlement mechanism using the Indian rupee—replacing the U.S. dollar and other currencies in international trade—making India the most proactive regional country in de-dollarization! In December 2022, India and Russia conducted their first trade settlement in rupees, with India attempting to purchase Russian oil in rupees to advance rupee internationalization. This March, the RBI permitted banks in 18 countries—including Germany, Israel, Kenya, Malaysia, Mauritius, Myanmar, New Zealand, Russia, Singapore, Sri Lanka, and the UK—to open 30 special rupee accounts for rupee-based payments... So far, the picture still looks relatively normal. That’s also why, even though India’s rupee internationalization efforts clearly encroach upon the U.S. dollar’s turf, the U.S. hasn’t obstructed them. Even President Biden has maintained exceptionally cordial relations with Prime Minister Modi. The reason is simple: The U.S. is currently overstretched and physically exhausted—it can no longer meet global demand single-handedly. Rather than letting these vacuums ultimately fall to RMB-denominated payments, the U.S. prefers India fill them instead. As the saying goes: 'The enemy of my enemy is my friend.' But here lies the problem—and precisely what I meant at the outset.

What factors caused the Indian rupee to fall below the 80-per-dollar threshold, hitting a record low?

On the 19th local time, the Indian rupee fell below 80 per U.S. dollar, setting a new record low. This decline follows massive foreign capital outflows from the Indian market this year, compounded by the Federal Reserve’s intensified monetary tightening, which has strengthened the U.S. dollar and further exacerbated the rupee’s depreciation. In the first half of 2022 alone, nearly $30 billion in foreign capital fled Indian equities—a record outflow. Meanwhile, surging oil and commodity prices have heightened concerns over a widening current-account deficit, severely undermining the rupee. According to a late-June Bloomberg survey, the rupee has depreciated 7% year-to-date. For the fiscal year ending March 31, India’s current-account deficit is projected to widen to 2.9% of GDP—nearly double the previous year’s figure. This indicator is the broadest measure of external financial conditions. Additionally, the yield on 10-year government bonds has risen from 6.46% at the start of the year to 7.39% in July, placing immense downward pressure on the rupee. RBI Governor Shaktikanta Das stated earlier this month that the central bank supports orderly appreciation or depreciation of the currency and is intervening across all market segments to curb volatility. Yet despite the RBI raising its repo rate twice recently and directly intervening in the foreign exchange market, the rupee’s 7% depreciation has persisted—and foreign exchange reserves have plunged sharply: falling from a record high of $642.5 billion in September 2021 to $588.314 billion in July 2022, the lowest level in nearly 14 months.

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