5 ms·

They have to pay in rubles, which are also strong vs euro

littlestymaar 4y ago
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)
- downrightmike 4y ago
  It's strong because they are burning foreign currency and stopping people from pulling out. Same thing that Sri Lanka did.
  - littlestymaar 4y ago
    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.
    - deleted 4y ago
      [deleted]
- lesuorac 4y ago
  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 https://www.xe.com/currencycharts/?from=EUR&to=RUB
  - hervature 4y ago
    That is the definition of strong. You need fewer rubles now for 1 euro. Just like you need fewer USD for 1 euro now.
  - littlestymaar 4y ago
    > 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).
  - s1artibartfast 4y ago
    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.
    - lostmsu 4y ago
      What product can you buy with rubles?
      - s1artibartfast 4y ago
        Wheat and gas, or better yet, euros to get anything elae
        littlestymaar 4y ago
        > anything* else *not under sanctions.
        s1artibartfast 4y ago
        Sanctions don't stop a forex investor from trading the rubles they own for euros and buying whatever they want
- EVa5I7bHFq9mnYK 4y ago
  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.
lostmsu 4y ago
No. The contracts are either in euro or in dollars.
- s1artibartfast 4y ago
  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.
  - lostmsu 4y ago
    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.
    - s1artibartfast 4y ago
      >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?
      - lostmsu 4y ago
        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.
usr1106 4y ago
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.
- s1artibartfast 4y ago
  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-payment-for-gas-supplies-to-be-made-in-rubles-only.html/ 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-restriction-on-countries-buying-wheat-and-sunflower-oil/ https://dailytimes.com.pk/962297/russia-imposes-ruble-restri...
- erichocean 4y ago
  > Russia has unilaterally required payments in Rubles despite long-term contracts saying something else. Yeah, that's how sanctions work: unilaterally.
  - usr1106 4y ago
    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.
Moldoteck 4y ago
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...
- chrisco255 4y ago
  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.
  - Moldoteck 4y ago
    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
EVa5I7bHFq9mnYK 4y ago
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.

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)

downrightmike 4y ago
It's strong because they are burning foreign currency and stopping people from pulling out. Same thing that Sri Lanka did.
- littlestymaar 4y ago
  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.
  - deleted 4y ago
    [deleted]
lesuorac 4y ago
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 https://www.xe.com/currencycharts/?from=EUR&to=RUB
- hervature 4y ago
  That is the definition of strong. You need fewer rubles now for 1 euro. Just like you need fewer USD for 1 euro now.
- littlestymaar 4y ago
  > 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).
- s1artibartfast 4y ago
  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.
  - lostmsu 4y ago
    What product can you buy with rubles?
    - s1artibartfast 4y ago
      Wheat and gas, or better yet, euros to get anything elae
      - littlestymaar 4y ago
        > anything* else *not under sanctions.
        s1artibartfast 4y ago
        Sanctions don't stop a forex investor from trading the rubles they own for euros and buying whatever they want
EVa5I7bHFq9mnYK 4y ago
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.

lostmsu 4y ago

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

s1artibartfast 4y ago
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.
- lostmsu 4y ago
  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.
  - s1artibartfast 4y ago
    >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?
    - lostmsu 4y ago
      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.

usr1106 4y ago

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.

s1artibartfast 4y ago
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-payment-for-gas-supplies-to-be-made-in-rubles-only.html/ 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-restriction-on-countries-buying-wheat-and-sunflower-oil/ https://dailytimes.com.pk/962297/russia-imposes-ruble-restri...
erichocean 4y ago
> Russia has unilaterally required payments in Rubles despite long-term contracts saying something else. Yeah, that's how sanctions work: unilaterally.
- usr1106 4y ago
  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.

Moldoteck 4y ago

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...

chrisco255 4y ago
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.
- Moldoteck 4y ago
  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

EVa5I7bHFq9mnYK 4y ago

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.