RUBLE IS RUBBLE: CURRENCY CHAOS
Russia is facing even more currency complexities.
India and China are refusing to pay for oil or anything else from Russia in anything but their own currencies. Problem with that? Nobody else wants Indian rupees or Chinese Yuan. Partly this is because India’s currency is non-convertible and can only be spent in India. Russia buys almost nothing from India so the rupee is worthless to it.
Problem: India and China are buying 60% of Russian oil, and India owes Russia $40 billion. Russia just doesn’t want the money it can’t use anywhere else. Russia has tried to get India to use Yuan, but it doesn’t want to use its acknowledged enemies currency.
Increasing American vigilance over the global banking system that uses dollars for almost everything, means even countries like the UAE are being far more careful.
China is having a great deal of fun out of this. It’s buying cheap commodities and paying in its own currency, which Russia is having to spend only in China to buy things that support the Chinese economy and not their own.
This is even less in Russia’s favour than it seems. A year ago there were 8 roubles to a yuan. Now there are 12.4. So Russia is making 32% less for the oil it’s selling to China.
China has basically stitched the Russians up like a roasting pig.
It’s much the same in Indian Rupees - that’s now 45% less than it was a year ago.
Russian imports from China are soaring - cars especially - but as the only country willing to sell it much, that’s hardly surprising.
More concerning is the US is placing sanctions on a Turkish and UAE shipping line for taking Russian oil at prices above the international cap. Greek tanker owners who have been extremely active in moving Russian oil are now thinking twice about what they’re doing - and they’re big players.
Russia has invested in old and dangerous tankers - nobody else will provide newer ones.
The conclusion is that Russia is utterly dependent on India and China. They know Russia is desperate and they dictate terms to Russia which Russia just has to suck up. The rouble is rubble in the international market and nobody wants it. Russia has got piles of money it can’t spend on anything it wants beyond what it’s already buying. Slowly even that is declining as the currency continues to devalue. Irony of ironies, the demand Russia creates for yuan and rupees is increasing their value against its own currency!
This is all slowly choking the Russian economy but it takes time. Yet slowly but surely it is working against them and they know it. There’s just nothing they can do about it.