So, why does Russia want to get paid in roubles?
In the aftermath of the Russian invasion the value of the rouble fell off a cliff. It fell from about 85 to the euro last year to 110 as the tanks rolled across Ukraine’s borders. Only an intervention by the Russian central bank it stood at 94.1 to the euro.
With the rouble trading at such low levels, Russian exports were going to bring in less money to subsidise state services and fund the war than previously expected.
Umm, no. If the rouble is lower then each $ is worth more roubles. So, a falling rouble provides more domestic cash from each unit of exports. And, if $ are accepted for exports then of course that export is worth the same in $ as it was before.
A higher valued rouble will not only bring in more cash,
They’ve managed to invert the relationship. Sigh.
it is also a matter of pride that trading nations are prepared to pay for Russian exports in the Russian currency.
Sure, that could be true.
A larger pool of roubles, generated by the demand from foreign countries and companies for Russian goods, would allow Moscow to challenge the US dominance, via the dollar, of global money markets,
The Russian economy is far, far, too small to get anywhere near to that. Plus, given that the entire point here is that the roubles get sent to Russia in payment, that means fewer roubles floating around outside Russia.
For instance, without access to dollars and euros via international exchanges, Russia is also proposing to pay the interest on its euro-denominated debts with roubles.
But Russia prints roubles. They can’t run out.
Sigh. But then this piece is by Phillip Inman. Inman is the economics editor of The Observer and an economics writer for The Guardian. That’s, umm, amusing, no?