![]() ![]() The combination of these three factors, and especially the final one, might potentially enhance the international role of the rouble. As a consequence, the move could boost demand for roubles in international forex markets, in particular by forcing the West to allow gas and oil buyers a way to purchase roubles under the current sanction regime, and thus – presumably – a way for Russia and its central bank to sell those roubles.A shift of the exchange-rate risk from Gazprom as exporter to its importer counterparties in the ‘unfriendly’ countries, which could potentially result in rising energy costs if the rouble gains value in a medium-to-longer run.Market segmentation, arising from obstacles to the formation of a unique global market with a single price for a product (in this case, gas), allows monopolistically competitive firms (such as Gazprom in this case) to operate pricing-to-market strategies by choice of the currency of pricing in international transactions for each such segmented market.Why might Putin have made this announcement? At least three key possible reasons come to mind, all related to well-known theoretical and empirical work in international monetary economics: The sanctions included, notably, the exclusion from the SWIFT bank messaging system of selected Russian banks and the freezing of assets of the Bank of Russia, the country’s central bank, coupled with subsequent restrictions on the wealth and movement of some Russian oligarchs. This move was a reaction to the sanctions these countries had agreed on quickly in response to the invasion of Ukraine by Russia on 24 February 2022. On 23 March 2022, President Putin puzzled the world, and international economists, with the apparently strange announcement that ‘unfriendly’ countries would have to pay for Russian gas (and, perhaps, oil too in the near future) in Russian roubles.
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