Petrorouble

[Tomasz + 1,608]

President Putin instructed Gazprom to change the currency into rubles in contracts with countries whose "currencies have been compromised", because "there is no point in delivering goods to Europe in its currency."

As a result, it will be necessary to buy rubles for other currencies in order to pay for gas or oil with them.

In this way, Russia bypasses the non-convertibility of rubles into other currencies.

Eventually, the rubles will run out on the free market and will have to be exchanged with the Russians.

Now the only question is what does it mean? Will the price be set in rubles by definition?

Doubtful.

Or rather, Western buyers will now have to buy rubles for settlements for dollars?

 Movement completely natural, predictable.

It just means that these are first real counter-sanctions, because the model is more costly and risky for both sides

But as the EU does not impose sanctions on gas and oil, it will have to pay for them in rubles, which it will buy and thus strengthen the Russian currency.

Besides Russians and Chinese they also switch slowly to direct settlements in rubles and yuans instead of the dollar.

Its first step of russian dedolarizatio of world commodity trade. Can be followed by selling oil for rouble.

More extreme version will be selling oil and NG for gold.

Edited March 23, 2022 by Tomasz

[Tomasz + 1,608]

Contrary to appearances, the sense is very big.

First, it forces the West to buy rubles. This liquefies the market.

Second, at the rate set by the Russian central bank. As long as contracts are nominated in euro or $ and the amount due is converted to rouble according to the exchange rate on a given day, this is not a big problem yet.

I suppose, however, that the Russians will want to annex the contracts at a certain ruble rate, and then they will artificially inflate it.

Or calculate the amount in according to one course, and they will sell them for another.

I do not know to what extent companies withdrawing from Russia would like to get rid of rubles and exchange them for another currency at a better rate than proposed by the Russian bank.

Such an action can be organized without the mediation of the central bank. However, I do not know what amounts we are talking about.

[Tomasz + 1,608]

Putin decided that Gazprom's customers from countries "hostile" to Russia will be accounted for in rubles for gas supplies. This is a way to protect against sanctions by Russian banks and foreign exchange reserves.

Putin came up with an unexpected way to protect Russia's finances from Western sanctions.

During a meeting with the Russian government on Wednesday afternoon, Putin first recognized that dollars and rubles were compromised currencies. And then Putin announced:

- I decided to implement as soon as possible a complex of actions on the transition in payment - let's start with this - for our natural gas, supplied to the so-called hostile countries, for Russian rubles.
Putin then instructed Russia's central bank to draft rules for the purchase of rubles on the Russian currency market by foreign gas buyers from Russia within a week.
Putin said that the quantities of contracted gas and the rules for determining the prices of the gas will not change. Only the currency of the settlements will change - to the Russian one.

"Unlike some [foreign] colleagues, we value the business reputation of a reliable partner and supplier. The changes will only affect the currency of the payment, which will be changed to Russian rubles," Putin said.

Following its appearance, gas prices on the Dutch trading floor TTF, the largest gas trading center in Europe, jumped by 25 percent. to over 132 EUR for 1 MWh of gas. In the afternoon, however, TTF prices fell and 1 MWh of gas in April contracts cost EUR 118.
For now, it is not known how Gazprom's customers from Russia's "hostile" countries, to which Moscow has included the European Union countries, which are buying 74 percent of the shares, will react to these plans. gas exported by Gazprom.

Gazprom's export contracts specify the currency in which the payment for gas from Russia is made.

So far, Gazprom has most often set the export price of its raw material in dollars or euros.

On Monday, however, Putin instructed the Russian government to issue a directive obliging Gazprom to convert settlements into rubles in contracts.

But at the same time, Putin ordered that the purchase of rubles on the Russian currency market should be allowed to be paid for the imported gas.
PGNiG did not comment on Putin's announcement. "We cannot comment on political declarations or provide detailed information on the provisions of contracts with contractors. The contract between PGNiG and Gazprom is valid until the end of 2022, PGNiG remains in ongoing contact with the contractor," the company told us.
A clever idea for sanctions
 It follows from this announcement that Gazprom's customers from the EU and Great Britain will first have to transfer to banks in Russia the appropriate amount of payment in "compromised currency", i.e. dollars or euros. And then on the spot in Moscow, exchange them for rubles.

With gas prices currently exorbitantly high, it is all about enormous money. In January, according to Russian customs services, Gazprom exported gas for $ 9.75 billion. From this, sales to "hostile" countries to Russia amounted to $ 6 billion, estimated the Interfax agency. Replacing such a mountain of money would strengthen the ruble - unless the central bank of Russia deals with the sale of currencies.:
Gazprom is taking advantage of Russia's attack on Ukraine. Sanctions? Europe is importing even more gas
Under the current Russian currency regulations, entrepreneurs have to sell 80 percent of their money to the central bank. foreign exchange receipts from exports.

In this way, Russia's central bank will immediately rebuild its foreign exchange reserves, now half-frozen by the EU, the US and the rest of the West. In this way, it will gain enough dollars and euros to service the foreign debt of Russia and its strategic companies on time, removing the specter of bankruptcy from them.
The need to transfer a gigantic payment for gas imports will stop the EU from excluding all major Russian banks from the SWIFT system that allows such international transfers.
And the problem will be even greater if the central bank of Russia to exchange the "compromised currency" into rubles only appoints one of the banks with which Europeans cannot trade due to sanctions.
For now, financial investors in Russia are counting on Putin to force Gazprom's Western customers to exchange dollars and euros for euros at Russian banks. Putin's announcements alone strengthened the ruble exchange rate on Wednesday.
Russia will not give more gas?
Putin's plan also suggests that Gazprom will not export additional amounts of gas beyond the supplies agreed in long-term contracts. Because the price of gas from such additional supplies is set on exchanges, which in Europe usually settle in euro. There would be no customers willing to settle gas sales transactions with next-day gas delivery in rubles.

On the other hand, the electronic gas exchange in Saint Petersburg, where gas could be bought for rubles for export from Russia, has suspended the fair since last autumn.

https://wyborcza.biz/biznes/7,177151,28254595,rosyjski-gaz-tylko-za-ruble-putin-chroni-rosje-przed-sankcjami.html

[Andrei Moutchkine + 828]

12 hours ago, Tomasz said:

Contrary to appearances, the sense is very big.

First, it forces the West to buy rubles. This liquefies the market.

Second, at the rate set by the Russian central bank. As long as contracts are nominated in euro or $ and the amount due is converted to rouble according to the exchange rate on a given day, this is not a big problem yet.

I suppose, however, that the Russians will want to annex the contracts at a certain ruble rate, and then they will artificially inflate it.

Or calculate the amount in according to one course, and they will sell them for another.

I do not know to what extent companies withdrawing from Russia would like to get rid of rubles and exchange them for another currency at a better rate than proposed by the Russian bank.

Such an action can be organized without the mediation of the central bank. However, I do not know what amounts we are talking about.

With Europe's trade deficit with Russia only getting worse due to sanctions, is a buildup of rubles in foreign hands imminent, which effectively equates to ruble's growth as a "reserve currency"