Russian President Vladimir Putin declared at a conference with the administration on Wednesday that Russia would only accept ruble payments for gas shipments to “unfriendly countries.” This could indicate the resurgence of the Russian economy and the rise of the PetroRuble.
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Putin announced on Wednesday that Russia intends to abandon all “compromised” currencies in gas purchase agreements. He went on to say that a number of Western countries’ unlawful acts to seize Russia’s assets had shattered all faith in their currencies. As a result, “unfriendly countries” will have to compensate for Russian gas in rubles, according to Putin.
“I have decided to implement in the shortest possible time a set of measures to change the payments for – yes let’s start with this – for our natural gas supplied to the so-called unfriendly countries in Russian rubles, that is to stop using all compromised currencies for transactions,” the Russian president said.
“It doesn’t make sense to deliver our goods to the EU and the US and get paid in dollars and euros,” he added.
Putin has given the Central Bank and the administration one week to figure out the method for acquiring rubles on the domestic exchange for Russian gas buyers.
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Russia will keep supplying gas in compliance with the contracts’ quantity and pricing parameters, according to the president. Just the transaction denomination will switch.
According to statistics from the Intercontinental Exchange, the revelation triggered a surge in the pricing of agreements for gas delivery at the TTF European hub. The price of gas surged from €97 per megawatt hour (MWh) to around €108.5 per 1MWh during Wednesday’s trading, but following the president’s speech, it climbed an additional €10 to €118.75 per 1MWh, subsequently falling to €114 per 1MWh as of 1pm GMT.
Russia has been slammed with three sets of unparalleled international sanctions in the last month as a result of its military action in Ukraine. Among many other things, the US, EU, and their allies have shut Russia off from their financial networks, prohibited dollar and euro activities, and frozen nearly $300 billion in Russian foreign exchange reserves. Simultaneously, they have progressed to purchase Russian oil and gas.
On Wednesday, the ruble soared when Russia announced that reimbursements for gas shipments to some Western countries will be made in the country’s currency.
The ruble soared to a three-week high of 95 rubles versus the dollar before resting below 100 rubles. It also increased by 3.5 percent against the euro, reaching 110.5 rubles per euro.
The ruble struck new lows earlier this month when the Russian economy was hammered by unprecedented Western sanctions, falling to record lows of 132 rubles per dollar and 147 rubles per euro on March 7. The currency’s exchange rate was approximately 75 rubles per dollar and 85 rubles per euro in mid-February.