The contracts are in euro/dollars, what "paying in rubles" actually means is that Russian exporting company must sell euros for rubles immediately upon receipt, so that the euros can't be frozen via sanctions.

But they pay in euro to gasprombank and Russia is doing conversion on their behalf. It's a flex to say that EU is paying in rubles for propaganda, when they are not...

But isn't the end effect the same? End result is euros are being dumped for rubles by EU nations themselves.

Once the euros are converted to rubles, it's unlikely they get converted back into euros somewhere else in the supply chain. As opposed to USD, which facilitates 87% of world trade.

That means net selling pressure on the Euro.

There is a difference. Russia is free to convert money as they wish, just as they could do in the past, nobody is forced to do conversion by themselves

Having to pay in rubble is the reason why rubble is strong vs Euro (because you need to buy rubble, in order to pay for gas)

What definition of strong are you using? Ruble (only one l) has historically been around 85:1 and now its ~60:1. (Rubles:Euros, i.e. 85 Rubles for 1 Euro)

https://www.xe.com/currencycharts/?from=EUR&to=RUB

That is the definition of strong. You need fewer rubles now for 1 euro. Just like you need fewer USD for 1 euro now.

> Ruble (only one l)

Indeed, thanks. Not a native speaker here, and I got everything mixed up with the early-war pun “the Ruble is going to rubble”

> What definition of strong are you using? Ruble […] has historically been around 85:1 and now its ~60:1. (Rubles:Euros, i.e. 85 Rubles for 1 Euro)

Yes, that means Ruble's purchasing power increased by 40% (one Ruble could buy you ~1.2 euro cent, and now it buys you ~1.7).

That means it is about 40% stronger than it historically has been.

IF you had your money in Rubles last year, can buy 40% more of a product than if you had your money in Euros.

What product can you buy with rubles?

Wheat and gas, or better yet, euros to get anything elae

> anything* else

*not under sanctions.

Sanctions don't stop a forex investor from trading the rubles they own for euros and buying whatever they want

Can you actually trade ruble? For some reason, for example, Sep-2022 futures chart for ruble has a gap between Jun 15 and today. And forex.com claims USD/RUB and EUR/RUB are unavailable for trading.

Yes, you can still trade it. Foreign currency exchange is decentralized. Us and EU exchanges have stopped trading and ruble, but you better believe in the n in Chinese exchanges still trade it

I think you are theorising too much based on a bit of Russian propaganda. I looked at a few exchanges and the spread on rubble is so high you could not buy more than a few dollars at the rated prices.

Look at the spread at the Bank of China ( China's largest bank and foreign exchange).

They are buying rubles 10.75 RMB and selling at 12.5 RMB. They are selling USD add 674.

This gives 63 rubles to the dollar.

The fact is that major economic powers in the world have not signed onto sanctions and have access to both Russian and Western currency.

It is true that many parts of the West have lower need for rubles because of sanction, but if you I think that the entire Globe has frozen trade with Russia and trade in Russian currency, you are the one that has fallen for propaganda. They just no longer can use western exchanges to convert currency. See the link below.

https://www.google.com/amp/s/markets.businessinsider.com/new...

That's a huge spread, which is exactly what I was talking about. You buy 1$ for 63 rubles on that bank chances are the 2nd dollar will cost you 64 rubles. Need to see the order book and market depths at different prices. High spread also means there haven't been many trades recently.

Did you read the link? $703 million worth of rubles is being traded a week, and that is just yuan and just one exchange.

So far you have changed your position from you can't trade it at all to the spread might become incrementally worse if trade exceeds 700 million US dollars worth a week

First of all, that's the volume they claim themselves.

Second, this exchange is in Russia. Can you actually move your "yuan" from that exchange to China or anywhere outside the country?

The ruble is strong because imports have been cut in half due to sanctions, while exports continue unabated. Actually, Europe sends more money to Russia now than before the war.

It's strong because they are burning foreign currency and stopping people from pulling out. Same thing that Sri Lanka did.

They did that indeed, especially in the early days to avoid a complete collapse, but since then it's not the primary mechanism at stake.

This is a great reminder that keeping your money afloat is not that hard as long as you can export. (For the record, what destroyed Venezuela comes from the fact that they needed to import light oil in order to process their heavy one. Once the sanctions cut the input flow, the output flow dried up pretty quickly and it was game over)

I don't think it will matter long, given the catastrophic failure of the Russian military (which is currently demilitarizing Russia pretty quickly, how ironic), but from the economics PoV it's still interesting to witness.

No. The contracts are either in euro or in dollars.

And Russia unliterally disregards those contracts and has turned off the gas.

Unfortunately, Europe does not control the flow despite whatever legal arguments they can muster.

I am not sure what are you talking about. Did anybody claim Europe controls the flow?

The contracts likely have clauses related to failures to deliver, and Russia will have little influence over how those clauses will be implemented.

>The contracts likely have clauses related to failures to deliver, and Russia will have little influence over how those clauses will be implemented.

Im sure there are plenty of clauses, but once you are at economic war with a country, the contracts don't matter. They aren't worth the paper they are printed on. Thats my point.

Russia says old contracts are void and has the gas. EU Can agree to new contracts or go without. They cant use the old contracts to make Russia give them gas on the original terms. What will they do if Russia refuses? sue them for breach of contract, sanction them, and seize their foreign reserves?

The answer is easy. They are going to claim the money from the reserves that were put on hold until the war ends.

E.g. if Russia would continue with gas supplies, the money for gas would got into the locked accounts. After war would end, Russia would get locked accounts minus reparations. Now if Russia stops supplies, after war ends Russia will get locked accounts minus reparations minus penalties for the failure to deliver gas.

I dont think Russia cares about the reserves because they don't think they will ever see them again. Reparations could easily exceed the total reserve.

Plus, they aren't planning to leave Ukraine, so they aren't planning to get it back

Therefore the money is a sunk cost and not leverage. Therefore finical penalties don't matter.

There's a circular logic in your claim. You claim they aren't planning to leave, and therefore it is not leverage. But the point of that is to exactly affect the plan to leave, which is not set in stone, obviously. The fact that they aren't leaving right now doesn't guarantee they won't leave in the future.

I think you are confusing consistent logic for circular logic. Putin never plans to hand back eastern Ukraine, why would he care about something that affects russia only if it does? They are not planning for failure.

The u.s. and Canada have a demilitarized border. This would be bad for the u.s. if we went to war with Canada. However, we don't plan to go to war with Canada, so we aren't basing our decisions on that outcome.

There are certainly things that may make Putin and more specifically Russia (which can also let go of Putin) let go of eastern Ukraine. In fact, there's a spectrum of such things from nicely asking, through sanctions and military resistance, all the way up to a second front opening on the border with China or nukes flying. The plan (whatever it is) has a line drawn somewhere on that spectrum, which signifies it is time to let go. And every new bit of military equipment, fines, sanctions is pushing it slowly toward that line.

Your claim is essentially there's no line, or that there is not a spectrum or that that line is beyond any economic measures. But there's no proof of that, so the logic in your "proof" is circular because your proof predicates on you knowing exactly where the line is (or isn't), when the location of the line is the thing to be proven.

I'm not saying there is no line to get Russia out of Ukraine. Anything is possible.

I am saying that it unlikely to be reached and my personal opinion is we are moving further from it not closer.

I'm also saying that Russia is not making decisions as if it will be crossed. They are doing the exact opposite, making decisions assuming that they will not be forced out and will not get the reserves back.

I don't think they would realistically get the foreign reserves back even if they left, so that isn't much of an incentive.

The US and EU have to much politically at stake to hand them back, even if they leave. It would be seen as letting Russia get away without consequences for the invasion.

Time will prove one of us wrong. In 5 years Russia will either be occupying Eastern Ukraine or not. They will either have control of the foreign reserves back or not.

I think that's not completely obvious how it works at the moment. Russia has unilaterally required payments in Rubles despite long-term contracts saying something else. Some smaller countries have refused and got cut of any deliveries. EU has generally declared not to pay in Rubles, but I don't know what e.g. Germany does at the moment. There is no realistic exchange rate for the Ruble because Western companies don't want to touch it and Russian companies have been forced to buy Rubles for most of the foreign currency they get.

> Russia has unilaterally required payments in Rubles despite long-term contracts saying something else.

Yeah, that's how sanctions work: unilaterally.

Sanctions would be stop selling gas. Just saying look we have this contract, we want to continue with it, but we change the terms without asking sounds something else.

To make priorities clear: Attack war is a crime and Putin, his government, and army leaders belong to Den Haag and then into prison.

But every westerner continuing to drive their car, fly to holidays and other wasteful lifestyle activites makes energy prizes go up and pays for Russia's war. Europeans a bit more directly than Americans, but in the end we have a global market so nobody goes free of reponsibility. Nothing they will end up in court for (would be a miracle if even Putin did, Bush and Blair didn't for doing not too differently), but certainly morally wrong.

Haven't checked recently but a month ago or so it was said Russia earns more money for oil and gas than in February, despite the volume having decreased quite a bit.

There is a lot of ongoing development on this front, although it has largely fallen out of the US media.1[1]

It looks like Russia is also only accepting rubles for wheat [2].

This is the obvious and natural result from the sanctions. OF course they will not accept a currency they can not spend anywhere.

[1] https://www.russia-briefing.com/news/russia-insisting-paymen...

>The EU’s executive body told the EU governments in a closed meeting that the authorities were not preventing companies from opening accounts with Gazprombank and would allow them to buy gas in line with EU sanctions.

>The EU will get a taste of what this means as Russia is turning off the still-operating Nordstream 1 pipeline for ‘routine scheduled maintenance’ from next Monday, July 11th to July 21st.

[2] https://dailytimes.com.pk/962297/russia-imposes-ruble-restri...

> Russian companies have been forced to buy Rubles for most of the foreign currency they get.

This restriction has been removed couple of weeks ago. At first it was 80%, then 40%, now it’s gone.

Ok, I don't follow the details so closely, I assume you are correct.

Which Russian companies still have significant income in foreign currency? I thought trade has mostly stopped. Except for energy, but that is dealt with in a different way anyway as discussed above, because still excluded from sanctions from the West and the Ruble requirement from Russia.

Then there is of course China and India which seem to intensify trade. No idea what currency they pay in and whether the increase has already been significant during 4 months.