Russia cannot withdraw billions of dollars in oil revenue from India — Bloomberg

Russia cannot withdraw billions of dollars in oil revenue from India — Bloomberg


Because of the imbalance in trade relations, Russia accumulates up to $1 billion in rupees every month, stored in Indian banks. This is reported by Bloomberg.

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Over the last hour, Russia has become the leading supplier of oil to India, a significant part of the raw material is sold in rupees, which Russian companies cannot withdraw.

In the first quarter, India’s foreign trade deficit with Russia amounted to $14.7 billion. Therefore, a surplus of rupees is forming in Russia – it is difficult for Russian companies to exchange them for rubles due to currency restrictions.

Because of this imbalance, Indian bank accounts will have $2-3 billion worth of rupees deposited every quarter, which Russia will not be able to use. This amount will be added to approximately $147 billion in net foreign assets created by Russia abroad during 2022.

Variants

According to Bloomberg sources, the parties are discussing several options for solving this problem. Thus, the Central Bank of India (RBI) proposed to invest surplus rupees in local securities, in particular, Indian government bonds.

Another option involves investments of Russian companies in Indian capital markets or the use of rupee reserves for investments in Indian infrastructure projects in exchange for shares.

Read also: Russia lost $40 billion due to oil sanctions

However, for Russia, the only acceptable option is the use of currencies of third countries, such as the Chinese yuan or the United Arab Emirates dirham, agency sources say.

At the same time, they note that Russia has a limited influence on this situation due to the lack of oil buyers who could replace India.

Most of the rupees in Indian banks have accumulated in the accounts of Rosneft, which owns 50% of the shares of Nayara Energy Ltd., the second largest oil refinery in India.

Bloomberg notes that the inability to receive revenues from oil exports leaves Russia with a hard currency at a time when its exporters are already facing payment delays. As a result, this may lead to the devaluation of the ruble.

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Source: Ministry of Finance

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