4 ms·

That seems like an extra step, why not just keep accepting euros? Why does he need to export rubles? Which other markets are going to want to buy them from Ger

That seems like an extra step, why not just keep accepting euros? Why does he need to export rubles? Which other markets are going to want to buy them from Germany after?

weinzierl 5y ago
This was my thinking as well and moreover, since the Ruble is so low you get a ton of Rubles for little Euros currently. If the contracts were in Rubles it is a disadvantage for Russia if the contracts were in Euro it should not matter. What is the scenario were Russia is better off with this move?
- wara23arish 5y ago
  Why are you assuming the price of gas will remain constant. It will probably fluctuate along with the ruble as long as russia deems it profitable
  - weinzierl 5y ago
    This from the German perspective. Germany has long term contracts with Russia. I assumed prices are also negotiated long-term, but I could be wrong.
bryanrasmussen 5y ago
Isn't that Germany's problem?
maratc 5y ago
We don’t know who will sell rubles. It’s plausible that Russia can force would-be buyers to buy them at a special place and at a special (unfavorable) rate.
- Raed667 5y ago
  I guess that depends on how the price of a cubic foot of gas was negotiated. Did they set it up to $ and then just converted to rubles at payment. Or was it setup in rubles and then you convert to the buyers currency.
  - weinzierl 5y ago
    That is the interesting question but regardless of the answer and considering the current exchange rate I only see that in one case it should be to the detriment of Russia in the other case it should not matter. What am I missing?
  - maratc 5y ago
    Imagine it was negotiated at dollars but now Russia demands rubles at a rate of 1:1.
    - rdtwo 5y ago
      Then it’s like giving away free gas. They probably want it at current market rates what ever those are 1000:1 1m:1 that will help remove excess rubles out of the system.
      - maratc 5y ago
        That's exactly the opposite. Imagine you need 100 Rubles to pay for 1cf of gas. But you don't have rubles, you need to buy them. Would you rather spend $1 (given a rate of 1:100) or $100 (given a rate of 1:1) to pay for that 1cf of gas?
        rdtwo 5y ago
        But you can buy them on the “market” black or otherwise so you ideally buy up as many as possible and give them back to the Russians for disposal. That creates demand for the currency and is the reverse effects of printing money.
notahacker 5y ago
The rubles are exchanged for gas and oil from Russia. But Germany being forced to buy rubles means that isn't quite such a tiny amount of demand for rubles as before, which means the value of the ruble doesn't coontinue to plumment. Which is good for Russians and Russian companies holding a lot of rubles who find that even foreigners still willing to trade with them don't think their rubles are worth many dollars or Euros any more.

That seems like an extra step, why not just keep accepting euros? Why does he need to export rubles? Which other markets are going to want to buy them from Germany after?

weinzierl 5y ago

This was my thinking as well and moreover, since the Ruble is so low you get a ton of Rubles for little Euros currently. If the contracts were in Rubles it is a disadvantage for Russia if the contracts were in Euro it should not matter. What is the scenario were Russia is better off with this move?

wara23arish 5y ago
Why are you assuming the price of gas will remain constant. It will probably fluctuate along with the ruble as long as russia deems it profitable
- weinzierl 5y ago
  This from the German perspective. Germany has long term contracts with Russia. I assumed prices are also negotiated long-term, but I could be wrong.

bryanrasmussen 5y ago

Isn't that Germany's problem?

maratc 5y ago

We don’t know who will sell rubles. It’s plausible that Russia can force would-be buyers to buy them at a special place and at a special (unfavorable) rate.

Raed667 5y ago
I guess that depends on how the price of a cubic foot of gas was negotiated. Did they set it up to $ and then just converted to rubles at payment. Or was it setup in rubles and then you convert to the buyers currency.
- weinzierl 5y ago
  That is the interesting question but regardless of the answer and considering the current exchange rate I only see that in one case it should be to the detriment of Russia in the other case it should not matter. What am I missing?
- maratc 5y ago
  Imagine it was negotiated at dollars but now Russia demands rubles at a rate of 1:1.
  - rdtwo 5y ago
    Then it’s like giving away free gas. They probably want it at current market rates what ever those are 1000:1 1m:1 that will help remove excess rubles out of the system.
    - maratc 5y ago
      That's exactly the opposite. Imagine you need 100 Rubles to pay for 1cf of gas. But you don't have rubles, you need to buy them. Would you rather spend $1 (given a rate of 1:100) or $100 (given a rate of 1:1) to pay for that 1cf of gas?
      - rdtwo 5y ago
        But you can buy them on the “market” black or otherwise so you ideally buy up as many as possible and give them back to the Russians for disposal. That creates demand for the currency and is the reverse effects of printing money.

notahacker 5y ago

The rubles are exchanged for gas and oil from Russia. But Germany being forced to buy rubles means that isn't quite such a tiny amount of demand for rubles as before, which means the value of the ruble doesn't coontinue to plumment. Which is good for Russians and Russian companies holding a lot of rubles who find that even foreigners still willing to trade with them don't think their rubles are worth many dollars or Euros any more.