New Delhi: Russian exporters taking rupee payments are reluctant to use the local currency in Vostro accounts to invest in equity and bond markets in India as the US dollar remains the most preferred currency, a finance ministry official told the New Indian Express.The official confirmed to the daily that rupee trade with Russia is taking place, but he did not give details about the quantum of transactions.“Russia has more rupee because we import from them. In August last year, the Reserve Bank of India allowed Russia to open special Vostro accounts in India through which they can invest in India’s equity and bond markets. But they are not using that facility as most countries are comfortable with dollars,” the official told the newspaper.A vostro account is an account that domestic banks hold for foreign banks in the former’s domestic currency. Indian exporters are paid the proceeds in rupees from the balances in the vostro account. The surplus rupee balance in the Vostro accounts can be used for investments in government securities, payments for projects and investments, and for export-import advanced flow management.While India has also started rupee trade with 18 countries, including Iran and UAE, it would take many years for the rupee to be a reserve currency, the official told the daily.But with surging oil imports from Russia, which has emerged as India’s fifth-biggest trading partner, from 25th rank last fiscal, the Indian government was hopeful of new avenues for its borrowings.In January, Reuters had reported, citing a trade ministry official, that India is hopeful of a rupee trade with Russia, as the South Asian country posted a near 400% jump in Russian merchandise imports in the first three quarters of financial year 2023 compared with a year ago.Russian crude oil imports to India reached a record 1.6 million barrels per day in February.Russian oil, in fact, comprised more than one-third of all imports in February, according to energy cargo tracker Vortexa, the Economic Times reported. Russia has also become the second-largest oil supplier to India after Iraq.Also read: India, Russia Opting to Route Goods Operations Through the UAE as Rupee Trade Acceptance SlowHowever, India’s soaring oil imports from Russia are making the local currency payment mechanism futile, ETEnergy reported. People familiar with the matter told ETEnergy, on condition of anonymity, that no payment has been initiated because Russian banks do not want excess rupee piling up, even as the gap between exports and imports is rising.Mint had reported in July 2022 that trade in rupee may boost investments in government debt. The business daily had quoted Abhishek Goenka, founder and chief executive of forex advisory service provider IFA Global as saying, “They [Russian exporters] could invest in government securities because every time there will be in surplus, they can either do that or hold reserves in rupees. But holding rupee reserves is not going to give them any return, and it comes with a risk of a 3-4% yearly depreciation.”“Russia may be interested in using Indian rupees because, from what I understand, they have a huge cache of the currency lying unused. The Indian government had suggested it could invest this money in capital projects in India, but I understand Russia may not be keen on doing that,” Madhu Nainan, a commentator and editor of oil and gas intelligence website Petrowatch, told Mint.Separately, commerce ministry officials told TNIE that rupee trades are few and far between for several issues including lack of understanding among traders about the local currency facilities.