Posted on 09/12/2023 7:25:41 PM PDT by Gunslingr3
Billions in Russian oil sale profits are stuck in Indian banks, marking a blow to President Vladimir Putin's attempts to stop using the U.S. dollar for trade.
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...accumulation of up to $1 billion each month in rupee assets in Indian banks that cannot be accessed due to restrictions by the Reserve Bank of India, which prevent Russian companies from transferring rupees stored in bank accounts in India to Russia and converting them into rubles, Bloomberg reported.
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"India operates a partially convertible capital account, which entails that the [Indian rupee] can be swapped for foreign currencies and vice-versa for limited reasons," according to Aditya Bhan, of the Observer Research Foundation, a global think tank.
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"This is a problem," Russia's Foreign Minister Sergei Lavrov told reporters in the Indian state of Goa in May. "We need to use this money..."
In September, Lavrov appeared to admit that Moscow has all but given up on rescuing its rupee-denominated stash worth billions from India.
"We talked with [Indian Foreign Minister] Subrahmanyam Jaishankar in Jakarta and discussed bilateral issues, including such problems. In the current situation, many billions of rupees have accumulated, which have not yet found their application, and our Indian friends have assured that they will offer promising areas where they can be invested," Lavrov said on September 10, according to TASS.
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Russia has also expressed interest in building an alternative payment mechanism with other BRICS (Brazil, Russia, India, China and South Africa) nations. But in July, India's foreign minister Jaishankar said "there is no idea of a BRICS currency."
(Excerpt) Read more at newsweek.com ...
Sucks to be stuck with more currency than one knows what to do with. I guess.
Things like this take time. The problem for us is that much of the world seems committed to ditching the dollar. They will likely succeed unless there is a world war where we are able to militarily conquer these nations. Is that the plan?
You misunderstand, it's stuck where they can't get it out.
India is working Russia both ways on the oil deal. They're enjoying a global discount, and then they're sticking the payments into Hotel Kaalifornia.
It's as if you sold me oil, and I told you, "Here's the payment, I've put some money into my savings account on your behalf."
"You want the money? Sorry. Maybe I can sell you something of mine instead? You have no other choice. Thank you, come again!"
If the alternative is to have the USA seize your dollar accounts (which they did) keeping it in the bank in India is better.
I’ve previously suggested that they will eventually adopt the Euro.
That works for everyone’s interest, the EU the BRICS. Everyone except the United States which goes to zero without the $US as the international currency.
The Indian government offered the Russians the ability to invest in India.
Perfect deal for India, they get oil at a 50% discount, and the revenue from that has to be spent in India only
Correct. Not everything Newsweek publishes is necessarily a lie. There is usually an element of truth hidden somewhere.
Russia should have conducted the settlement in bitcoin, beyond the ability of any national authorities to thwart or seize.
Instead they agreed (no other choice?) to accept payment in rupees, and the Indians are blatantly exploiting them.
I'm not sure why people expect the people in power in the BRICS governments to give up their own power to debase their national currencies. They rail against America's undeniable benefit of seigniorage, but none of them actually want to renounce their capital controls, nor ability to inflate in national currencies and pay off their political support.
Why you think the Germans want to embrace Brazilian or South African spendthrifts after the way the Greeks shafted them deserves more explanation.
They've been trying since 1945. Not a ton of progress to show for it.
The problem for us is that much of the world seems committed to ditching the dollar.
In theory, I suppose. And contrary to public opinion probably a good thing for everybody, including the United States, if they could pull it off. Sadly it doesn't seem to be happening. Dollar remains dominant.
Lol, heads America wins, tails Russia loses. Poor Putin can't get a break.
Everyone except the United States which goes to zero without the $US as the international currency.
Ha - that's a take. Fine give me all of your worthless dollars then.
Naa, I don’t think the Russians are as DUMB as Western leaders thing - otherwise top-line Western military hardware wouldn’t be going POP! on an hourly basis.
“Why you think the Germans want to embrace Brazilian or South African spendthrifts after the way the Greeks shafted them deserves more explanation.”
???
My suggestion is that they use the Euro instead of the US dollar for international transactions.
I guess you don’t know that the $US dollar is used for international transactions.
It is a huge benefit for the USA to have that. It would be a huge benefit for the Euro to have it replace the dollar for that function.
There is approx 7 trillion dollars of foreign exchange transactions per day, and almost 90 percent involve the $US.
That creates a huge demand for dollars, which is why the US can run massive budget and trade deficits for decades without devaluation or higher interest rates.
The US can print massively every time there is a financial crisis without big currency devaluation or inflation.
If the USA were to lose that because other countries start using the Euro, the US becomes a “post-industrial” economy that can’t finance its budget and trade deficits without high interest rates or massive inflation.
It won’t even be able to afford imports. Which will be difficult since the US doesn’t make much anymore and relies on imports of Ch!nk crap.
Both the BRICs and the EU have a big incentive to make this happen.
But many in the USA don’t see the risk because they are too bound up in the “’Merica, F*ck Yeah!” mentality.
Misunderstanding on my part.
But why doesn't Russia trade in the Euro with India now?
This is a common misperception, because manufacturing has declined as a percentage of the employment pool, but the U.S. is still a major manufacturer, that manufactures more value than ever before. We just use way more robots than people to do it, and if it is cheap crap we let cheap labor overseas turn it out.
The U.S. is the second-largest exporter in the world, with an estimated $2.12 trillion in exports for 2020.
Growing pains.
Russia’s accumulation of rupees is not convertible into useful stuff or another currency. So the currency piles up as numbers in an account with little real world value.
“But why doesn’t Russia trade in the Euro with India now?”
Their stated goal is to do a stand alone BRICs currency.
I assume they would want to get some or most of the benefit of being the international currency. The problem is the convertibility limits on both the rupee and the yuan.
My guess is the BRICs will eventually figure out that they get some of what they want with the Euro (independence from the $US and the heavy handed economic sanctions and confiscations that go with it).
“The U.S. is the second-largest exporter in the world, with an estimated $2.12 trillion in exports for 2020.”
That’s great except the USA is the number one importer by far, with a trillion dollar trade deficit per year.
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