Page 80 - RusRPTOct23

more stringent restrictions may be introduced on the withdrawal of funds to foreign banks, including in friendly currencies and rubles. Companies may be limited in their ability to accumulate foreign currency in foreign accounts, and requirements may be introduced to obtain permits for direct investment in foreign assets. Analysts also do not understand how the implementation of the “Chinese model” is possible without dividing the ruble into two exchange rates - this is not yet clear without additional clarification.
After the start of the war, tens of thousands of foreign exchange transactions of Russians were blocked, and their money hung on correspondent accounts of European and American banks, Kommersant writes, citing expert estimates. The amount of "hanging" funds can reach 10-20 billion rubles. Lawyers are looking for ways to unlock this money, but so far there are practically no results.
The replacement of the US dollar and the euro by the Chinese yuan and Indian rupee has caused a whole series of problems. One solution might be if the BRICS group of developing nations introduced a single currency — an idea that Russia is particularly keen on. But there are formidable obstacles to this actually happening.
The US dollar and euro were used to pay for 30% of Russian exports in July (compared to 87% before the war). On the one hand, by continuing to trade in euros or US dollars, Russian companies make themselves more vulnerable to Western sanctions. On the other hand, switching to the rupee or the yuan is far from ideal due to problems with conversion, risk management and capital flow.
The problems with using rupees to buy Russian crude are a classic example. After the European oil embargo, India became the biggest buyer of Russian oil. That led to a radical imbalance in trade between the countries: in the first half of 2023, Russian exports to India were worth $30bn, while imports were just $7bn.
Russian exporters are paid in Indian rupees, which is only partially convertible and literally has nowhere to go — at the moment, most of the money is just sitting in Indian banks. Many believe this was a major reason for the ruble’s collapse over the summer. Others feel the “rupee problem” is overstated. Either way, it is a direct consequence of the de-dollarized Russian economy.
The Central Bank of Russia (CBR) announced an extension of restrictions on money transfers to foreign countries for an additional six months, according to a statement by the regulator on September 29.
These restrictions will remain in effect from October 1, 2023, through March 31, 2024.
80 RUSSIA Country Report October 2023 www.intellinews.com