Experts spoke about the risks of investing in Indian currency
Indian Rupees are a reliable storage and investment instrument. Their accumulation by Russian companies not only does not create problems, but also expands existing financial opportunities. This was stated by Deputy Minister of Foreign Affairs of the Russian Federation Andrei Rudenko. He added that the Indian currency is increasingly used in international payments and is convenient for investment in the economy of India and its regional trading partners. Does such a high assessment mean that it’s time for ordinary Russians to think about storing their savings in rupees?
According to Rudenko, the rupee exchange rate is quite stable and is not subject to speculative manipulation, which cannot be said about the US dollar or euro. The Deputy Foreign Minister of the Russian Federation admitted that the Indian currency has relatively low convertibility, but he is confident that this should not become a problem, because the Indian authorities are taking active steps to internationalize the rupee in trade with other countries. The diplomat is confident that the influence and share of this currency in international trade will only increase. Rudenko believes that areas for investment revenues of Russian companies will only expand.
The Russian Deputy Foreign Minister started talking about the situation with Indian rupees for a reason. Let us recall that at the end of last summer, Russian companies had problems with revenue in Indian currency. “Russia supplied $30 billion worth of oil and petroleum products to India in the first half of the year, and our imports from India are estimated at about $6-7 billion a year, “ ex-Minister of Finance of Russia, now a major banker, Mikhail Zadornov stated in his article dated August 29. — We have nothing to buy in India, but we cannot return these rupees, since the rupee — non-convertible currency. $30 billion in six months — more than the entire current account surplus.” According to the financier, it is the “stuck” ones. rupees were one of the main problems with the ruble exchange rate, which at the end of summer — at the beginning of autumn it began to rapidly weaken against the dollar.
However, judging by Rudenko’s statement, the problems identified by the ex-minister of finance no longer worry Russian exporters and the economy. True, those interviewed by MK experts argued about the validity of this conclusion. “Taking into account that investments and settlements are virtually closed for Russian companies in dollars, euros and pounds, all strong regional currencies that remain independent are interesting for the Russian economy, “ The director of the corporate finance department of IVA Partners supported the position of the Deputy Minister of Foreign Affairs of the Russian Federation. Artem Tuzov. — First of all, these are, of course, the yuan and the rupee. India and China — “Now they are one of the most promising countries in terms of economic potential, which is why the role of their national currencies is growing in international trade.” And investments in the Indian economy through rupees — This is promising, however, only if we talk about the state level. For the personal wallet of Russians, rupees are still difficult to acquire, both for investment and for savings, admitted Tuzov.
The Indian Rupee is not a freely convertible currency, it is partially convertible. “Due to this circumstance, as well as due to restrictions on the movement of capital,” it is of little use for international settlements (other than settlements with India itself) and for the creation of international reserves, — Head of the analytical department of BKF bank Maxim Osadchiy enters into an absentee dispute. — There are no rupees in the National Welfare Fund. Holding cash rupees is extremely dangerous, as India regularly withdraws individual issues of rupees from circulation. So, in 2016, they were “demonetized” banknotes in denominations of 500 and 1000 rupees of the Mahatma Gandhi series. In 2023, banknotes in denomination of 2000 rupees were withdrawn from circulation; from October 1, 2023, they lost their solvency.»
Due to the fact that India imports a lot of oil and other goods from Russia during the NEA period, while its exports to Russia are small, India has a huge trade deficit with Russia. During April-November 2023, Russia exported goods worth $40.5 billion to India, but imported goods worth only $2.7 billion from India. As a result, India had a trade deficit with Russia of $37.7 billion. Russian exporters Large volumes of illiquid rupees are stuck. “In order to somehow solve this problem, supplies of bananas from Ecuador, which had been at fault, were replaced by supplies of bananas from India,— the analyst said. — Ecuador supplied Soviet weapons to the United States, and then they went to Ukraine. Completely independent of this circumstance, a “humpback fly” suddenly appeared in Ecuadorian bananas, detected by the vigilant Rospotrebnadzor. Let’s hope that this dangerous fly doesn’t live in Indian bananas.” As for the use of rupees as a replacement for dollars and euros in the wallets of Russians, there are even fewer prospects. According to our interlocutor, only one bank in St. Petersburg launched a time deposit in Indian rupees in April 2023, but now this The bank does not offer savings in rupees to individuals. Currently, it has not been possible to find any Russian bank offering citizens time deposits in Indian rupees, so this tropical exotic has not taken root in the Russian market, the expert concludes.
«Although India is the fastest growing major economy, with growth rates expected at 6% in fiscal years 2023 and 2024, the Indian rupee as a currency is highly volatile in relation to major world currencies, — Oksana Stepannikova, associate professor of the RUDN Faculty of Economics, continues the conversation. Its strengthening continues to be constrained by underlying economic issues, including dependence on imported oil (80% of oil is imported). In July 2022, the central bank of India introduced a mechanism for international trade settlements in Indian rupees. This measure allows parties to invoice, pay and settle imports and exports using the rupee, which will further the long-term goal of internationalizing Indian currency. However, from a short-term perspective, purchasing the Indian rupee is a premature decision due to existing restrictions, the economist is sure.