Top Indian firm pays for Russian coal in yuan and traders say more buyers could turn to China's currency

• India's top cement producer is paying for Russian coal using Chinese yuan, Reuters reported.
• The firm is paying $25.81 million worth of yuan for the Russian imports, and traders say similar deals will follow.

India's top cement producer is paying for a cargo of Russian coal using Chinese yuan, according to a Reuters report.

A customs document reviewed by Reuters revealed UltraTech Cement is importing 157,000 tons of coal from the Russian far east port of Vanino, priced at 172.6 million yuan, or about $25.81 million. The invoice was dated June 5.

"This move is significant," a currency trader told Reuters. "I have never heard any Indian entity paying in yuan for international trade in the last 25 years of my career. This is basically circumventing the USD."

Traders familiar with the matter told Reuters that other companies have placed orders for Russian coal with yuan payments too.

India has yet to condemn Russia's invasion of Ukraine, and the two nations have increased their volume of business transactions, especially in energy.

The report comes as Moscow tries to get around Western sanctions, which have frozen its foreign currency holdings and shut out Russia from most of the global financial system.

In March, India and Russia were in talks to revive a Cold-War era rupee payment mechanism which would allow companies in both countries to make deals without dollars, though it has not come to fruition.

Meanwhile, China has been trying to elevate its yuan to challenge the US dollar's dominance.

Most recently, the People's Bank of China announced earlier this week it is developing a yuan reserve with the Bank for International Settlements and five other nations, including Singapore and Hong Kong. Each of the members will contribute about 15 billion yuan, or $2.2 billion.