As the rouble careens southward in value and, more importantly, capital flees Russia’s bleak economic future, the likelihood of capital controls being re-imposed by the Kremlin increases geometrically. Once that happens, the rouble will have isolated itself in a manner that belies Vladimir Putin’s 2009 claim that the “Rouble can claim for the role of a reserve currency.”

The present crisis aside, the future trajectory of the Russian economy looks so bleak – for reasons of demography if nothing else – that the future of the rouble is one of retreat, slowly returning to the Soviet shell it had emerged from post-Cold War. And this in turn will reflect an increasingly inward looking worldview of Moscow’s leadership.

It is interesting to speculate as to the trajectory of the rupee, the currency of an economy about the same size as Russia’s. The answer seems to be that the rupee is following a slow but steady path to the internationalisation that Putin alluded to. But New Delhi will do it in a manner far less outspoken than Moscow. Which is why it may succeed.

I am pretty certain no Indian prime minister and possibly finance minister has publicly spoke of the rupee as being a global reserve currency like the dollar or euro. Such musings are left to the Reserve Bank and central bankers are extremely wary of such an Idea.

G Padmanabhan, deputy central banker of India, in a 2013 speech spoke at length about the rupee becoming a currency of the world. “The Indian rupee is a natural candidate for being considered for greater internationalisation.” But this should be largely in the area of “trade invoicing”, he said, and generally in a “careful and gradual manner.” But most of his speech was about the reasons why the rupee had a long way to go: India’s economy was too small, too prone to current account deficits, too dependent on foreign hot money, too inflation prone and so on. Ultimately, no one was using the rupee overseas.

None of this is a surprise. A macro-economically challenged India, rightly, is cautious to a fault about the health of its currency. What is surprising is, when one looks closer at the figures, despite the lack of enthusiasm of New Delhi – and the opposite sentiment in Moscow – the rupee has become nearly as internationalised as the rouble in recent times. And the economic future of India is much better. The rupee worldview is one of greater integration and, possibly, reserve currency status. We should “aspire” to see the rupee as an “international currency” said Padmanabhan.

The latest Triennial Central Bank Survey of the Bank of International Settlements throws up some interesting numbers regarding rupee versus rouble use in the international markets. One, despite the lack of enthusiasm for such activity by New Delhi, the rupee has been bandied around the international currency markets in a manner comparable to the rouble. Two, the rupee’s rise in the international system has a more stable upward trajectory. And this will be greatly enhanced after the Crimean bust-up between Russia and the West.

Example A: the rouble percentage of global foreign exchange market turnover has gone from 0.3% in 1998 to 0.9 in 2010. The rupee went from 0.1 to 1.0 percent in the same period. By 2013, however, the rouble had jumped to 1.6% while the rupee had stayed at 1.0 – reflecting presumably the halving of India’s economic growth rate in the intervening period. One suspects these trends will reverse for both currencies in the next few years.

Example B: When the global foreign exchange market is divied up by currency and by instrument, the rupee fares surprisingly well. The rouble is much more used: daily average in April 2013 the rouble turnover in such markets was $ 85 billion. The rupee figure was $ 53 billion. But the rouble was used much more heavily in spot transactions while the rupee led the way in outright forwards: $ 24 billion compared to $ 9 billion. Since outright forwards lock a buyer of that currency for a set time at a set exchange rate, the greater rupee figure would seem to be a vote of confidence in the stability of the currency – at least over the rouble.

India’s greatest challenge will be to persuade other countries to consider invoicing their trade in rupees. The currency is still too unstable – it just escaped a meltdown last fall. But compared to the rouble who’s present collapse is just a reminder that it went through the same, only worse, in 1993, the rupee looks like its backed by gold. Over 90% of India’s trade is dollar invoiced and even Bangladesh has rejected the use of the rupee for such purposes.

The recent issuance of rupee bonds by the World Bank slowly helps deepen the pool of instruments that are rupee backed – and financial market depth is a crucial criteria for a reserve currency. But the simple lack of full convertibility and the simple size of the Indian economy means the rupee will go global over a longer time frame. However, one prediction that can be made: the rupee will get a seat at the global high table before the rouble.

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