Vladimir Putin has demanded Russian gas sold to “unfriendly” countries from 1 April be paid for in roubles – but why?
In the aftermath of Russia’s invasion of Ukraine at the end of February, the value of the rouble fell dramatically, with Russia’s central bank forced to intervene.
With the rouble trading at such low levels, it meant exports would bring in less money to fund the war than previously expected.
But demanding countries pay in roubles benefits the Russian economy and shores up the falling currency.
Analysts have also speculated that dollars and euros are less useful to Moscow while sanctions are in force.
But some experts have suggested the switch to the payment system is politically motivated and is a sign of Russia trying to exercise its control over Europe.
This plan could backfire if the Kremlin tries to insist current contracts in euros and dollars are changed to roubles, as this would be in breach of international protocol.
“Even if a buyer is willing to pay in roubles, it may prove
quite challenging given the sanctions put in place against a
number of Russian banks,” ING Bank said.
Rouble payments are technically possible as sanctions are
only partial – a Western buyer could pay euros or dollars to
their bank, which would, in turn, send it to a Russian bank and
ask them to pay Gazprom in roubles. But it is unclear whether Russia’s central bank has enough rouble liquidity to enable European clients to source the currency.