On Friday the ruble surged to the highest level in seven years against the euro, thanks in large part to the Putin-ordered mandatory conversion of foreign currency by export-focused companies, also as China and India (and much of Europe) are still buying Russia's energy and agricultural products… despite the loud the threats coming from Washington, which have lately included a potential move to block Russian sovereign debt payments.
At this point the Russian currency is about 20% stronger than pre-invasion, as the war grinds on into its fourth month. Jumping as much as 9% against the Euro, the ruble last hit this level in June 2015…
And the Ruble is at its strongest against the dollar since 2018…
Aiding the surge, there's further been weak demand for dollars and euros given restrictions on cross-border transactions, and as an increasingly isolated Russia sees slowed imports.
While it's unclear which companies or countries are consenting to the Putin-ordered ruble payment mechanism, it's clear the Russian leader's gambit is working, as Bloomberg reviews:
Under the new mechanism, importers of Russian pipeline gas must open two accounts at Gazprombank to handle payments for the fuel. Around half of Gazprom’s more than 50 foreign clients have already opened such accounts, Deputy Prime Minister Alexander Novak said earlier this week.
Finland has become the latest alongside Poland and Bulgaria last month being cut off from Russian gas supplies (Finland confirmed its taps will be cut Saturday, though much less reliant on gas among its diverse resources).
Novak further confirmed that a number of "major clients" have either already paid using the mechanism are are willing to pay on time to avoid cutoff.
One Russian stock market analysts was cited by Bloomberg as saying, "Pressure on the dollar and euro will increase as more buyers of gas open special accounts." Further according to Freedom Finance LLC's George Vaschenko: "There won’t be pressure every day — and the currency could fall back into the range of 59-60 rubles — but there will be fresh waves of strengthening for sure."
So much for President Biden's "rubble" narrative of a mere weeks ago…
As a result of our unprecedented sanctions, the ruble was almost immediately reduced to rubble.
The Russian economy is on track to be cut in half.
It was ranked the 11th biggest economy in the world before this invasion — and soon, it will not even rank among the top 20.
— President Biden (@POTUS) March 26, 2022