Russian President Vladimir Putin announced that foreign buyers will have to pay for natural gas in rubles from Friday (1st), and appointed Gazprombank, which is not currently sanctioned by Europe and the United States, as an intermediary, driving the Russian ruble to the ninth consecutive year. The session climbed higher, almost back to pre-war levels.
Buoyed by Putin’s order on Thursday, the ruble rose 1.6 percent on the day to 83.20 per dollar, its highest level since Feb. 25.EURIt also climbed 1.8 percent to 92.50 rubles.The ruble is currently underpinned by a number of capital controls by the Russian government, including a ban on buying dollars andEURcash.
According to Putin’s order, buyers must open an account with the state-run Gazprombank to convert foreign currencies into rubles. The buyer first transfers the foreign currency to an account specially opened by Gazprombank, and Gazprombank will exchange it for rubles and transfer these rubles to the buyer’s account as a payment to Gazprom.
As a bank under Gazprom, Gazprombank is the third largest bank in Russia and is now designated as an intermediary for Russian gas ruble payment, which is equivalent to consolidating the bank’s position as an important medium for natural gas flows between Europe and Russia, avoiding severe sanctions from the West.
According to Katja Yafimava, a scholar at the Oxford Institute for Energy Research, Putin’s announcement of the ruble payment plan may be aimed at sending a message to Europe:As long as Gazprombank is not sanctioned and payments are processed by the bank and paid to Gazprom, gas supplies to Europe will not be cut off.
Russia’s seven largest banks have been expelled from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment network since the beginning of March, but two banks have not been eliminated, one is Sberbank, the largest bank with 100 million depositors. ), the other is Gazprombank with only 5 million depositors.
When Western countries planned the target of sanctions, they agreed to let Gazprombank go to prevent energy from being affected. Several EU member states, including Germany, have refused to expand restrictions on energy, even though Western countries have continued to discuss expanding sanctions since then.
Although the United Kingdom announced last week that it would freeze Gazprombank assets, the United Kingdom only imports 4% of its natural gas from Russia, while Germany relies on Russia for half of its natural gas.
