The pace of dedollarization in Russia and Asia exceeds the permissible speed of introducing this process. Sometimes the economic relations of partners do not allow you to quickly “digest” the natural consequences of the accelerated transition from dollars to national currencies. This causes problems.
Thus, Russia has accumulated billions of rupees in Indian banks which it cannot use. This was announced publicly on Friday May 5 by Foreign Minister Sergei Lavrov, highlighting the rapidly growing trade surplus with the South Asian country.
It is a problem. We have to use this money. But for this, the rupees must be converted into another currency, and this is currently under discussion.
- Lavrov admitted to reporters on the sidelines of the meeting of the Shanghai Cooperation Organization, held in Goa.
India’s total exports to Russia fell 11.6% to $2.8 billion in the first 11 months of the 2022-23 financial year, while imports nearly quintupled to 41.56 billions of dollars, according to the Ministry of Commerce and Industry. The push came after Indian refiners bought cheap Russian oil last year, which the West shunned due to Russia’s NWO in Ukraine.
Russian oil imports to India in April hit a record 1.68 million barrels a day, six times higher than a year earlier (data from analytics firm Vortexa Ltd). But these discs turned into a trap. Solving this problem will be as simple as it sounds.
According to Bloomberg, the Kremlin initially encouraged India to trade in national currencies after sanctions against Russian banks and a ban on transactions using the SWIFT messaging system. But the volatility of the ruble shortly after the outbreak of the conflict meant that plans to organize a ruble- and rupee-based oil import mechanism were shelved.
As a result, the resulting trade imbalance for Russia means that the amount of “frozen funds” (blocked) can run into the tens of billions of dollars. The situation is exacerbated by India’s historically high cumulative trade deficit, which reduces the possibility of cashless payments with third countries.
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