By Gleb Bryanski and Elena Fabrichnaya
MOSCOW (Reuters) – The Russian ruble rebounded above 100 to the U.S. dollar, trading at 99.50 on Friday, after President Vladimir Putin’s policy opened new payment channels for European customers of Russian gas, allowing foreign currency flows to resume.
The ruble strengthened by 1.5% against the dollar, according to over-the-counter data from banks. It was also up 2.4% at 13.57, a 14-month high against the Chinese yuan in trading on the Moscow stock exchange.
Putin’s law meant that European buyers of Russian gas, including Hungary and Slovakia, who used to use Gazprombank for their transactions, were able to convert their money into rubles in other banks that were not subject to sanctions.
US sanctions were imposed on Gazprombank on Nov. 22 affected the Russian foreign exchange market, causing a 15% drop in the value of the ruble against the dollar.
The Russian currency is now on track for its best week in four months, indicating that the market has adjusted to sanctions. The ruble has been depreciating since Aug. 6, the first day of Ukraine’s entry into the Kursk region of Russia.
Russia’s finance minister, Anton Siluanov, directly linked problems with energy payments and US sanctions against Gazprombank to the ruble’s weakness, saying the weakness will end as soon as a payment solution is found.
“Our foreign trade partners are looking for ways to settle accounts with their counterparts in other countries, so I think one more week and everything will be fine,” Siluanov was quoted by Russian media as saying on December 5.
Analysts and traders shared this view, saying that Putin’s policy has freed up energy payments, giving a boost to the Russian economy.
“Previously, a large amount of foreign currency, which was blocked due to new banking sanctions, may be ‘open’ and reach the market, which is already thin,” a forex trader in the central bank of Russia, declined to be identified. , told Reuters, explaining the reasons for the rise in the ruble.
Putin said this week that up to 90% of Russia’s foreign trade was in rubles and in ‘friendly’ foreign currencies such as the Chinese yuan. However, some traders still prefer dollars and euros, creating domestic demand for these two currencies.
Sanctioned Russian lenders, including state-controlled Sberbank, can no longer hold and sell dollars in euros as they cannot have corporate accounts in the US and Europe and are excluded from the global SWIFT system.