The Russian rouble rebounded on Friday, trading at 99.50 against the U.S. dollar, following a decree by President Vladimir Putin that introduced new options for European buyers of Russian gas to make payments. The move has allowed foreign currency flows to resume, providing a much-needed boost to the currency.
According to data from banks, the rouble gained 1.5% against the dollar and 2.4% against China’s yuan, trading at 13.57 on the Moscow stock exchange. The decree permits European gas buyers, such as Hungary and Slovakia, to convert their currencies into roubles using banks outside the scope of sanctions, bypassing restrictions on Gazprombank.
This policy shift comes after U.S. sanctions against Gazprombank in late November caused significant disruptions in Russia’s foreign currency market, leading to a steep 15% depreciation of the rouble against the dollar. However, the latest developments indicate that the market is beginning to adapt, and the rouble is now poised for its strongest weekly performance in four months.
Russian Finance Minister Anton Siluanov linked the rouble’s earlier weakness to energy payment issues caused by the sanctions. He expressed confidence that the volatility would subside soon, as alternative payment mechanisms are now in place.
Market analysts agree that Putin’s decree has played a pivotal role in stabilizing the rouble. A trader at a major Russian bank noted that previously stalled export revenues are now entering the market, providing much-needed liquidity in an already thin trading environment.
President Putin highlighted that nearly 90% of Russia’s foreign trade is now conducted in roubles and currencies of allied nations, such as China’s yuan. However, some importers still rely on dollars and euros, maintaining a domestic demand for these currencies.
Sanctions have significantly impacted Russia’s financial landscape, with major state-controlled banks like Sberbank unable to trade dollars or euros due to restrictions on correspondent accounts and access to SWIFT. To address this, Russian banks have been importing foreign currency cash from third-party countries to meet client demand.
Unsanctioned subsidiaries of foreign banks, including Austria’s Raiffeisen, Hungary’s OTP, and Italy’s UniCredit, have filled the gap by facilitating dollar and euro transactions. These banks now form the backbone of Russia’s dollar and euro markets, which have transitioned entirely to over-the-counter trading following sanctions on the Moscow Stock Exchange.
Sberbank CEO German Gref commented that the rouble’s fair value is between 100 and 105 to the dollar, adding that no significant fluctuations are expected in the near term. “We do not anticipate any surprises in the exchange rate at this point,” Gref stated during an investor briefing.
