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>Moreover, the legal limitations on currency trade there means that the conversion rate is not true. This is why Russia wants payment for gas in rubles. If the
by Thorrez 4y ago
>Moreover, the legal limitations on currency trade there means that the conversion rate is not true. This is why Russia wants payment for gas in rubles. If the conversion rate was true, they would convert the euros to rubles themselves. But instead they want Europe to pay for the difference.
I don't understand. Europe is paying for gas in rubles at face value. You say rubles are worth less than face value. So Europe is paying for gas at less than face value. That seems like it helps Europe, not hurts it.
- yostrovs 4y agoThe rubble is worth less than conversion rate, so the buyer forced to convert at the conversion rate is getting a bad deal. He's paying more for a ruble that should be cheaper to buy.
- Thorrez 4y agoWhy is Europe forced to buy rubles at the official conversion rate? Why can't they buy them at the real rate? Even if Europe has to buy rubles at the official rate, I still don't see the problem. They use the rubles to buy oil priced using the official rate, so that just undoes the conversion.
- yostrovs 4y agoThe contracts were signed in euros. Rubles for sale on the market are controlled in large part by Russian entities. They've been artificially limited in making rubles available, driving up the price of the ruble.
- Thorrez 4y agoIf the contracts were signed in euros, then that's even better for Europe. The more the ruble goes up in value, the lower the oil price goes. E.g. if they signed at 1€/gal when €1=10 rubles, then rubles double in value so €1=5 rubles, the price of oil goes down from 10 rubles/gal to 5 rubles/gal.