In early May, President Vladimir Putin signed a bill that gives the government a right to switch part of Russia’s trade to the national currency.
On Monday, the country’s deputy finance minister said in an interview with a state-run TV channel that such a shift would have only a “microscopic negative consequence.”
On Tuesday, Andrey Bogatenkov, head of crude trading for Russian state producer Rosneft said trading in dollars “is more convenient, it’s the traditional way. But there are also possibilities.”
Also Tuesday, Dmitry Piskulov, chairman of the country’s National Foreign Exchange Association said “there are no legal or technical obstacles in the banking system against this proposal. These matters have been discussed and this may even potentially increase the FX market turnover.”
And yet a panelist at a conference to discuss ruble settlement hosted by Icap in London, sitting next to Mr. Piskulov, described the notion as “ridiculous and absurd idea.” It is “just a hot topic in Russian mass media,” said Sergey Romanchuk, president for Russia for the ACI—a financial-markets association.
Among the challenges in this plan: It’s not really up to Russia. At least, not entirely.
“The choice of an invoicing currency for trade depends on both sides,” said David Hauner, economist at Bank of America Merrill Lynch. “The Russians can try to negotiate with their trade partners. They can try to push for trade in rubles. But it is not clear that they will get their way.” In any case, “Russia needs dollars, for its reserves and for its imports. They export raw materials, but they buy consumer goods, high-tech goods, cars, and so on.”
