By Gleb Bryanski and Elena Fabrichnaya
MOSCOW (Reuters) – The Russian ruble bounced past 100 against the U.S. dollar to trade at 99.50 on Friday after a decree by President Vladimir Putin that opened new payment options for European buyers of Russian gas, helping to smooth foreign currency flows resumes.
The ruble strengthened 1.5% against the dollar, over-the-counter data from banks showed. The price also rose 2.4% to 13.57, recovering above 14, compared to trading on the Moscow stock exchange.
Putin’s decree meant that European buyers of Russian gas, including Hungary and Slovakia, who previously used Gazprombank for their transactions, could now convert their currency into rubles at other banks not covered by sanctions.
The US sanctions imposed on Gazprombank on November 22 disrupted the Russian currency market, leading to a 15% decline in the ruble’s exchange rate against the dollar.
The Russian currency is now on track for its best week in four months, suggesting the market has adjusted to the sanctions. The ruble has been weakening since August 6, the first day of the Ukrainian invasion of Russia’s Kursk region.
Russian Finance Minister Anton Siluanov directly linked the problems with energy payments and US sanctions on Gazprombank to the ruble’s weakness. He said the volatility will disappear once a solution to the payments is found.
“Our participants in foreign trade are finding ways to settle scores with their counterparts abroad, so I think another week and everything will be fine,” Siluanov was quoted as saying by Russian media on December 5.
Analysts and traders shared this view, saying Putin’s decree unlocked energy payments, boosting Russia’s currency.
“Previously stalled large export earnings, which were stuck due to new banking sanctions, may have been ‘unblocked’ and have now entered the already very thin market,” said a forex trader at a major Russian bank, who asked not to be identified . , told Reuters, explaining the reasons for the ruble’s rise.
Putin said this week that up to 90% of Russia’s foreign trade is now in rubles and currencies of “friendly” countries such as the Chinese yuan. However, some importers still needed dollars and euros, creating domestic demand for both currencies.
Russia’s sanctioned largest lenders, including state-controlled Sberbank, can no longer hold and trade dollars in euros because they cannot have correspondent accounts in the US and Europe and are cut off from the international SWIFT system.
Many Russian banks have imported large amounts of dollar and euro cash from third countries at least through 2023 to serve their customers when they want to buy foreign currencies.
However, many Russian banks, including local subsidiaries of Austria’s Raiffeisen, Hungary’s OTP and Italy’s UniCredit, were not subject to sanctions and were able to use SWIFT.
Such banks formed the core of Russia’s dollar and euro market, which became completely over-the-counter after sanctions on the Moscow Stock Exchange in June, making the yuan the most traded foreign currency in Russia.
Sberbank CEO German Gref said the real value of the ruble is between $100 and $105 against the US dollar, adding that he did not expect any more surprising exchange rate movements for the time being.
“Today we don’t expect any surprises with this. It will fluctuate depending on the situation. And currently we see no room for a significant weakening of the ruble,” Gref said at the bank’s investor day.
