Western countries and NATO partners have reacted by imposing punitive sanctions to dissuade the Russian government’s invasion of Ukraine and weaken the Russian rouble, making the fight both economic and physical. However, it seems like the Russian government is given a good defence to its currency.
The effects of the sanctions caused the Russian currency to plummet to a record low, and the central bank had ordered the suspension of most transactions as a result of the sanctions which included the removal of Russia from the Swift international payment mechanism.
President Vladimir Putin, on the other hand, is attempting to defend the Russian currency, declaring that Russia will begin selling its gas in roubles to “unfriendly” countries. Following the shocking declaration, the Russian rouble rocketed to a three-week high above 95 against the dollar, before settling near 100.
Russian gas contributes to over 40% of Europe’s total consumption, with daily imports from Russia ranging from 200 million to 800 million euros ($880 million) so far this year.
As of January 27, Gazprom reported that 58% of its natural gas sales to Europe and other nations were settled in euros. The dollar accounted for around 39% of all sales, while the sterling contributed about 3%.
Hence, aggressive Russian actions aimed at boosting its currency may result in huge losses for the US dollar against the Russian rouble, reducing the impact of western sanctions and giving Russia more bargaining power which is critical as negotiations commence.
For further inquiries about this article, contact: Email: Ifeanyi.ubah@nairametrics.com Twitter: @ubahjc Linkedln: Jeremiah Ubah
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