FRANKFURT (dpa-AFX) – The decision by Russia’s President Vladimir Putin to only deliver gas to certain countries such as Germany in exchange for payment in rubles can be seen as a political step. “First of all, Putin is sending a political signal,” said analyst Ralf Runde from the Landesbank Hessen-Thringen of the financial news agency dpa-AFX on Wednesday. “Ultimately, it’s probably a tit-for-tat response to the sanctions imposed by the West.”
In response to Russia’s invasion of Ukraine, the USA and other Western countries had frozen a large part of Russia’s currency reserves, among other things. Putin said on Wednesday that the West had devalued its own currencies with this step. The countries that Russia has described as “unfriendly states” will be affected by the conversion of gas payments to rubles. This includes Germany and all other EU countries, but also the USA, Canada and Great Britain.
“Furthermore, Putin’s measure supports the national currency, the ruble,” went on to explaincirculation. The ruble has come under severe pressure since Russia’s invasion and Western sanctions, falling to historic lows. “If the gas bill is no longer paid in US dollars or euros in the future, this will of course support the ruble because it is in demand,” said the expert. This could also benefit the ailing Russian economy.
It is difficult to say to what extent the liquidity on the ruble market is sufficient to pay all gas bills in Russian currency,circulation added. “The market shouldn’t be particularly deep because all Western countries are practically on the outside.” However, the Russian central bank could theoretically print unlimited rubles and sell them to the gas-buying countries for foreign currency, although the exchange rate is questionable. “The Russian central bank will find a way to initiate this,” said Runde. Putin has given the central bank a week to finalize the modalities for switching from foreign exchange to ruble payments./bgf/jkr/jha/