How can depreciation of Russian ruble stop! Role of gold!

As we have seen that Ruble depreciated almost 100% against USD in last 1 year from the level of 50 to almost 100 at present. 

There are many reasons for this ranging from economic sanctions by west and ongoing Ukraine conflict to Chinese economic slowdown. As per my view, fundamental level of ruble should be between 70-80 against USD and I believe it would appreciate to that level provided Russian central bank and government takes some measures.

After the starting of Ukraine war, India has been major buyer of Russian energy apart from defence equipment, etc. But because of sanctions, Russia receives money in Rupee account in different Indian banks. There are difficulties in bringing this money to Russia because INR (Indian Rupee) is not fully convertible currency. As per the latest estimates, Russia holds appx. USD 40 bn equivalent of INR in different Indian bank accounts in India. Besides, Indian economy is based on huge domestic consumption growth and it is not a export power house. So trade balance with Russia would not be achieved despite of various incentives and promotion by Indian government. Trade will remain heavily skewed in favor of Russia. As such also it would be difficult for INR to become international reserve currency unless and until Indian government and Reserve Bank of India makes changes in rules and makes INR a fully convertible currency.

✅So what is the solution for this and how can Russian money lying in India be brought back to Russia? Also if this money be brought back to Russia then ruble would appreciate as reserves of Central bank of Russia will increase. As of now, I see only one solution and that is Russian government should negotiate with India for trade settlement in gold. It means that INR would be converted to gold at the existing price of the day and equivalent gold would be credited to some special escrow account of Russian central bank either in India or Russia or UAE. This would be considered as part of foreign currency reserves of Russia and it would increase foreign currency holdings of Russia. Russian central bank then can transfer equivalent ruble to various Russian exporters’ bank accounts. This will boost the demand of gold and ruble and there won’t be much demand of USD. This will stabilize value of ruble and solve the problem of trade settlement with India.‼️