A former Kremlin official blames the collapse of the ruble on stocks of Russian rupees stuck in India


A man counts Indian rupee banknotes in Varanasi, Uttar Pradesh, India.Dheeraj Singh/Bloomberg

  • The former Russian Finance Minister blamed the accumulation of rupees in Moscow for the ruble’s depreciation.

  • The Kremlin authorities admitted that Russia had accumulated billions of rupees in Indian banks.

  • The Russian Energy Ministry denied the statements of economist Mikhail Zadornov.

Mikhail Zadornov, Russia’s former finance minister, attributed the ruble’s recent collapse to the Kremlin’s stockpile of rupees stuck in India.

in An opinion article for RBCThe economist, a local outlet, called on the Russian Central Bank to intervene in the exchange rate markets, noting that ruble levels will not organically reorient themselves in today’s environment.

In his view, the current ruble level of 95 per dollar is partly due to Russia’s inability to convert the rupees it earned through exports into its own currency, leaving the rupee stranded.

Energy trade between the two countries has boomed since Western restrictions on Russia, but Moscow quickly discovered that the rupees used in trade are of little use in most global markets.

“We have nothing to buy in India, but we cannot return these rupees, because the rupee is a non-convertible currency,” Zadornov wrote. He estimated that Russia sent $30 billion worth of oil-related products to India, and imported $6-7 billion worth of products.

The economist also pointed to other factors, such as the stimulus given to the Russians. When this happens, the demand for imports rises, thus pushing the ruble down.

He said the ruble could return to 85 against the dollar if Russia abandons economic stimulus and the central bank tightens monetary policy. He added that, among other ideas, future export agreements should meet repatriation requirements.

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Zadornov’s writings attracted the attention of the Kremlin. that it State-run agency TASS Russia’s Energy Ministry said it denied its claims that the troubled rupee had weakened the ruble.

Moscow has admitted this before Russia has collected billions of rupees that sit in Indian banks.

Russia prefers that payments be made in the Chinese yuan, which has become the official currency Most used foreign currencies In Russia. Meanwhile, Moscow was reported to be hesitant about using the rupee due to exchange rate fluctuations.

Russia and India had previously suspended negotiations over the use of the rupee For trade between the two countries. Russia and India remain deadlocked over the currency dispute, which has also arrived Frozen weapons sales Between the two countries.

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