Economic sanctions imposed by the United States, Europe and their allies have shaken the Russian economy and caused the value of the ruble to plunge.
On Wednesday President Vladimir V. Putin of Russia came up with a way to get his opponents to help prop up his currency, by demanding that “unfriendly countries” use rubles to buy the Russian oil and gas that is still flowing.
“I have made a decision to implement in the shortest possible time a set of measures to switch payments for … our natural gas supplied to the so-called unfriendly countries to Russian rubles,” Mr. Putin said on Wednesday.
Sanctions aimed at the Russian central bank effectively froze hundreds of billions of dollars of assets. The actions immediately drove down the value of the ruble as people frantically rushed to turn their rubles into a more stable currency, like the dollar or the euro.
The central bank took several steps to support the currency, including doubling interest rates to 20 percent as a way to entice people to keep their rubles in the bank.
That freeze, Mr. Putin said, was evidence that the dollar and euro “compromised themselves” and were unreliable.
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said the action means that every time a Western country buys a barrel of oil it would be “propping up his domestic currency.”
“If you’re invoiced in rubles, you’ve got to go out and buy rubles,” he said. “I don’t know if there is workaround.”
Source: NY Times