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Russia's Rupee Dilemma: A Billion-Dollar Monthly Quandary with India

Sep 11, 2023

By: BlinkX Research Team

Russia has been engaging in a trade relationship with India that heavily favors India. As a result, Russia is accumulating a significant amount of Indian rupees, which it is finding difficult to use or bring back to Russia due to restrictions on the local currency. This has led to a buildup of rupee assets outside of Russia, which is contributing to a larger pool of foreign capital that Russia has been accumulating since the conflict in Ukraine began. 

One major factor in this situation is that Russia has become a major supplier of oil to India, and a significant portion of their trade is settled in Indian rupees. This shift in trade patterns occurred as European customers reduced their purchases from Russia in the wake of the conflict. 

To address this situation, Russia's Foreign Minister, Sergei Lavrov, stated that India will present options for investing the accumulated rupees. This implies that the two countries are in discussions about how to utilize these rupee assets for mutual benefit. They are exploring potential areas or projects in which these funds can be invested.