Russia and Ukraine have been fighting for more than a month, and the two sides are stalemate on the battlefield. The United States, Europe and Russia are fighting more intensely on the financial battlefield.
The United States and Europe have banned major Russian banks from using the SWIFT (Society for Worldwide Interbank Financial Telecommunication) system. This so-called “financial nuclear bomb” might not kill Russia. The most important indicator of whether the United States and Europe have crushed Russia’s finance and economy is the exchange rate of the Russian currency, the ruble. When the Russian-Ukrainian war broke out and the United States and Europe began to impose sanctions on Russia, the dollar rose sharply once morest the ruble, and the ruble fell sharply. Before the war, the dollar rose to more than 70 or 80 rubles to 150 rubles, but the ruble exchange rate then experienced a magical experience. The “V”-shaped trend has now rebounded sharply to 1:83, and the exchange rate has returned to the level before the war on February 24, which has surprised many market analysts.
Putin resorted to a number of measures to control the ruble’s plunge. 1. The Russian central bank issued a series of temporary capital control measures, announcing that it would limit the amount of residents’ withdrawals of US dollars from foreign currency bank accounts and limit foreign customers’ withdrawals in certain foreign currencies.
2. The Central Bank of Russia sharply raised interest rates by 10.5%, from the original 9.5% to 20%.
3. The most powerful countermeasure is to ask “unfriendly countries” to buy Russian gas, which must be paid in rubles. Due to the high dependence of European countries on Russian natural gas, this move forced European countries to buy rubles in the market to find the figure, which is equivalent to asking buyers to hold the exchange rate of rubles. Russia announced this measure, and the ruble rose immediately. This move is more effective than foreign exchange controls and sharp interest rate hikes, and now Russia has begun to relax some of its foreign exchange controls.
On the surface, the United States and European countries opposed the purchase of Russia to pay the ruble. However, before the words were finished, German Chancellor Schultz held a meeting with Putin on the 30th to study whether there was a compromise.
During the talks between the Russian and German heads of state, Putin said that he would designate Gazprom, which is not prohibited by the United States and Europe from using SWIFT and can still use US dollars or euros, as a revenue and payment bank. If Europe wants to buy Russian natural gas, it can deposit dollars or euros into the bank, and the bank can convert it into rubles, so that it can meet Russia’s requirements. German Chancellor Schultz said at the meeting that he disagreed with the arrangement, but agreed to further research in order to “better understand the process.”
Putin’s coup can be described as killing several birds with one stone. First, European countries can still claim that they buy Russian gas and pay in euros or dollars, because they just deposit foreign currency with Gazprom; second, Russia says they only charge rubles, while Gazprom will Converting the received dollars or euros into rubles will also have the effect of holding up the ruble exchange rate.
Third, since Gazprom has become the designated bank for the EU to purchase Russian natural gas, the US and the EU cannot sanction her or prohibit it from using the SWIFT system. This opened a door for Russian banking. Other Russian banks can conduct international payments through Gazprom.
Fourth, it gives Russia greater flexibility. The Euros or US dollars received by Gazprom do not need to be converted into rubles, but can be exchanged for part of the foreign exchange. As for how much rubles actually exchanged by Gazprom and how much foreign exchange it kept, it has become a black box, and the outside world has no way of knowing.
Fifth, supporting the exchange rate of the ruble is equivalent to supporting Russia’s ability to print money, as well as Russia’s economy, which can survive the sanctions of the United States and Europe.
At this point, there is a simple conclusion. Russia proposes such an implementation plan. If the EU insists on not accepting it, Russia will cut off the supply of natural gas; if European countries accept it, it is equivalent to creating a mechanism to allow Russia to bypass SWIFT sanctions. Hold up the exchange rate of the ruble. This puts European countries in a dilemma, because the price of accepting this mechanism is small, but the cost of anti-Taiwan is very high. Now it is up to the European countries to decide.
Russia has energy, minerals, and food at hand. The United States wants to use sanctions to kill her. She has many countermeasures.
Lu Yongxiong
