Russia says all big exports could soon be in rubles
Russian President Vladimir Putin issued an order last week for Russian gas, which accounts for 40% of European needs, to paid by countries Moscow labelled as "unfriendly" in rubles instead of dollars or euros.
Asked whether the payments should be in rubles starting from Thursday, Kremlin spokesman Dmitry Peskov said:
Absolutely no. As we discussed before, payments and delivery is a time consuming process ... This does not mean that a tomorrow’s delivery should be paid (in rubles). From a technological point of view, this is a more prolonged process.
Commenting on the Russian ruble plan, Anatoly Aksakov, head of the financial committee in Russia’s lower house of parliament, said this week: “I believe we don’t have to change the law, it’s all stipulated there.”
The foreign currency will be exchanged at a market rate, which will be set at the Moscow Exchange. They can buy the rubles wherever,
he said.
In the strongest signal yet that Russia could be preparing an even tougher response to the West's sanctions, Russia's top lawmaker suggested on Wednesday that almost Russia's entire energy and commodity exports could soon be priced in roubles.
Parliament Speaker Vyacheslav Volodin said the European Union would have to pay in rubles if it wanted Russian gas and said oil, grain, metals, fertilizer, coal and timber exports could be priced the same way.
"If you want gas, find roubles," Volodin said in a post on Telegram.
Asked about these comments Peskov said:
This is an idea that should definitely be worked on. It may well be worked out.
The government, the central bank and Gazprom are due to present proposals for the switch by Thursday.
The Group of Seven major economies have agreed to reject the Kremlin's demand, saying it would be a "one-sided and clear breach of the existing contracts."
The above remarks suggest that gas buyers will indeed have global access to the ruble on the interbank FX market, but that the exchange rate (fixing) on the Moscow Exchange (where the ruble is also traded) will be used to settle gas purchases. However, as a number of major Russian banks are subject to sanctions, there is limited RUB liquidity on the market and it is not yet a convertible currency due to capital restrictions. Thus, there are still question marks over the availability of sufficient volumes of roubles.
Meanwhile, fears of disruptions to Russian gas supplies are growing in Europe, partly because the Russians want to switch to a ruble-based payment system.
Former President Dmitry Medvedev said the sanctions had "boomeranged" back to undermine European and North America economies, driving up prices for fuel and heating and eroding confidence in the dollar and euro.
"The world is waking up: confidence in reserve currencies is melting like a morning fog," Reuters cited Medvedev as saying.
Abandoning the dollar and the euro as the world's main reserves no longer looks like a fantasy.
Medvedev said "crazy politicians" in the West had sacrificed the money of their taxpayers on the altar of an unknown victory in Ukraine.
The era of regional currencies is coming.
Meanwhile, the Russian deputy foreign minister said, according to the Russian news agency TASS, that it is not a breach of contract for Russia to ask rubles for gas, and that he hopes that European gas buyers and governments will soon change their hitherto negative stance on this issue. (they do not want to pay in rubles).
Cover photo: Shutterstock
