what awaits Russia, and what are the consequences for the ruble? — Finance on vc.ru
On March 23, Russian President Vladimir Putin announced that Russia would sell gas in unfriendly countries exclusively for rubles:
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“The delivery of our goods to the European Union, weather reports, feedback in dollars, euros, in other currencies does not matter to us anymore. Therefore, it was decided to implement a set of measures in the shortest possible time to transfer payments – let’s start with this, using the provided gas – to transfer payments for our gas supplies supplied to the so-called unfriendly countries, for Russian rubles. That is, the preference from using in such calculations all currencies that have compromised themselves”
He also stressed that deliveries under already concluded contracts continue in accordance with the contractual volumes and prices, since Russia is responsible for its obligations.
On these words alone, by the evening the ruble strengthened from 103.8 to 97.7 rubles per dollar (plus 6%) and from 114.0 to 108.0 rubles per euro (plus 5.2%), the cost of gas delivered to Europe jumped more than 8%, and oil rose by 5% just in case.
Unfriendly countries are those who introduced against us, and among the major consumers of gas – all of Europe, Great Britain, Ukraine and Japan.
Deputy Prime Minister Alexander Novak added: “It is necessary to switch to national currencies in oil trade, confidence in the dollar and the euro is falling”
The head of Roscosmos Rogozin also announced the transition to the conclusion of contracts with other countries in rubles.
So, what global changes await us in the world and in Russia
The decision to focus on settlements in euros and dollars for our natural wealth is a real historical event, which on the horizon for a couple of years will change the order of world settlements. This is the first decisive step in building the economic and financial independence of our country.
Russia is one of the leaders in the extraction of natural resources:
Gas: 38% (fuel and energy resource)
Oil: 12% (fuel and energy resource)
Iron ore: 30% (construction material)
Tin: 30% (used primarily as a safe, non-corrosive, toxic coating)
Nickel: 36% (used for the production of batteries, including for electric vehicles)
Cobalt: 20% (production of heat-resistant, magnetic, superhard, corrosion-resistant and other alloys and caps)
Gold: 1st place – in “%” it is difficult to evaluate, because j. the exact size of world reserves is unknown
And many other natural resources, as well as sold in Russia. It is difficult to imagine how the world will work if absolutely all Russian resources are sold for rubles, but several main directions of movement, as well as risks, can be identified.
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A healthy ruble grew up as the original, steppe, that’s what this family has.
Buyers of raw materials will be purchased in rubles
Since they don’t have rubles, in order to sit with us, they will need to buy them. At first glance, nothing changes – they give us their currency, receive rubles, which they give us back in exchange for gas. What can be transplanted from this? In fact, the scheme is a little more complicated – European and American consumers buy rubles on the Moscow Exchange in large quantities and save them to protect against expected exchange rates, that is, what Russia is doing now, buying dollars and euros to pay for imports.
I sell my currency and buy rubles, Europe and the USA will thereby strengthen the ruble against their currencies.
Russia will no longer benefit from a weak ruble
Remember Putin’s interview in 2014 and his phrase: “The ruble depreciated, but stopped at the expansion of the budget”, which became a meme?:
Despite the fact that the logic in his words is ironclad, and, in fact, individual ruble adjustments in the budget expand with the development of the exchange rate, his words sound just like an excuse for the Central Bank’s inability to maintain the exchange rate of national currencies at an acceptable level.
Now, when the price of gas will be fixed in rubles, for example, 200 thousand rubles per 1,000 cubic meters, for the state budget, in terms of revenue, it will still cost 100 rubles or 50 dollars, now this will be the concern of our “Western partners”, we are seeing exactly 200 thousand rubles.
Maybe now the Central Bank and the Ministry of Finance will start working on strengthening the ruble, and not on how exporters can get more rubles from foreign exchange earnings? What do you think?
Exporters will not profitably store a lot of currency in order to sell it at a higher price later, they will strive to exchange it for rubles. With the strengthening of the ruble, it will also rise and safely receive Russians, since imported goods will be cheaper.
The development of the Russian exchange
First of all, the Moscow Currency Exchange will benefit from the purchase of large foreign rubles. Secondly, Russian exporting companies in the future may switch to bond issues in rubles instead of eurobonds in dollars and euros. Buy them there – European companies should be protected by ruble savings, and their interests will secure their relationship by investing in Russian bonds or shares of Russian companies.
Also, a new benchmark — an exchange indicator — for gas supplied to Europe (similar to the use of the Dutch in euros) may appear on the St. Petersburg Stock Exchange, but it will be traded in rubles.
Growing influence of the ruble financial system
Since other countries will have ruble reserves, we will have exactly the same access to them as the US and EU now have access to official foreign exchange reserves. A similar desire will arise in Russia.
in the future, which to some extent will create a small vicious circle effect.
If the Russian currency stabilizes, then large reserves in the currencies of other countries will not be so profitable for the Central Bank and the Ministry of Finance – they will depreciate, and most of them should be exchanged back for rubles, transported back to Russia and invested in our meeting. The government is interested in saving savings, so they are constantly secured by debts in a fixed currency, in fact, freezing them there in their obligations to those countries: in fact, we accept projects that invest inside Russia.
Cons and risks
Of course, nothing is devoid of disadvantages, so selling Russian goods for rubles. the main and frequently encountered risk is the refusal of Russian gas and oil, which has already been announced in countries with limited access. Of course, it is far from complete failure, since in some European countries the danger from Russian gas is growing by 90%, but the probability of such events is far from zero.
Since the end of February, Russian oil has already been trading at a discount of more than $30 off Brent (compared to $3-5 before the events began), but are there as many buyers willing to buy Russian oil for rubles with its 12% share in production. ? If some of the clients go to the Saudis, Arab Emirates or Iraqis, then Russian oil can be sold even cheaper, albeit for rubles. Unlike gas in Europe, the preference for oil is much easier, but China and India are already showing a desire to significantly increase purchases of Russian black gold.
What in the end?
Of course, everything is described above – the full scenario, how it will be implemented in practice, the question, we will observe the items. How the Central Bank, the Ministry of Finance, exporters and Western countries will act in this situation is still unknown, but it clearly indicates the vector of given directions.
The de-dollarization of the world is an ordinary round in its own development. Prices for oil, gas, gold will now be tied not only to the dollar, but also to the ruble, yuan and other currencies.
Earlier, the leaders in oil production – the Saudis – were offended by the United States and went to the country-leader in oil imports – China – to agree on the sale of oil for yuan. The second most populous country in the world – India – announced an increase in imports of Russian oil with payments in rubles and rupees, a week later. And now Russia has demanded from buyers of its energy resources and other distorted calculations exclusively in rubles.
What are your forecasts for the Russian economy?
Your financial advisor