Checking a fake: how Russia "lost" $40 billion in trade with India

Sergey Kondratiev, Principal Director on Economic Studies, and Mikhail Zhuravlev, Senior Expert at the Institute for Energy and Finance, commented on Russian oil supplies to India to the Novye Izvestia newspaper.

Why is the yuan preferable for Russia?

Sergey Kondratiev admits that the contract may be in one currency, and payments are made in another. However, in the case of rupees, this is unlikely, and not only because the Indian currency is non-convertible, the expert explains:

— I would also add a high volatility of the exchange rate, since cargo from the Baltic ports to India can take 30 to 40 days, and the payment also takes place not immediately, but after 30 to 60 days. It turns out that during this time you can even lose a lot on exchange rate differences. Therefore, Russian oilmen, like oilmen in the Middle East, were pegged to the dollar or to the actual substitute for the dollar, the UAE dirham, whose exchange rate is fixed to the dollar.

Is $40 billion really stuck in India?

Mikhail Zhuravlev is categorical in his answer:

— About $ 40 billion in accounts in rupees is, in my opinion, a fake. Firstly, because there is no trade in rupees. Secondly, too much money, oil companies would not be able to finance their operations, and the trade balance would be disrupted. It seems that someone simply divided the volume of exports from Russia to India by the cost of Urals on a FOB basis.

Sergey Kondratiev believes that there is a problem, and the money is really stuck, but not $ 40 billion:

— I think that we cannot talk about $ 40 billion. I think we are not talking about 4 billion either. We are talking about tens or hundreds of millions of dollars.