Ruble moving closer to regional currency status

The heads of the national banks and financial ministers of the CIS countries will consider shifting to the ruble in payments for Russian energy supplies. The agreement was reached at the meeting of the CIS Council of Heads of Government on November 14, Moldova’s Prime Minister Zinaida Grechannaya reported.
Currently, CIS countries have to buy dollars to pay for Russian energy supplies, and Russia then converts these dollars into rubles, which only adds to the price of oil and gas. With this in mind, the switch to rubles will be most beneficial for importers.

For the ruble, the proposed move would also mean an important step towards the status of a regional reserve currency, as most of the former Soviet republics import Russian energy. So far, Belarus is the only one to pay in rubles for Russian gas and oil. The agreement was part of the Russia-Belarus deal for a loan of $2 billion, which will be granted to Belarus in 2008-2009 for 15 years.

On November 13, Russia and Belarus signed the memorandum “On mutual understanding between the governments of the Russian Federation and Belarus regarding the coordination of measures to enhance the competitiveness of national economies,” providing for a loan to Belarus to support its trade, including with Russia.

The switch to payments in rubles will be Belarus’ “contribution to making the ruble a regional reserve currency,” Belarusian Deputy Prime Minister Andrei Kobyakov said.

For his part, Russian Finance Minister Alexei Kudrin, who signed the document for Russia, said that some companies were already paying in rubles for Russian supplies. “We are going to extend the sphere of ruble payments, which should be regulated by intergovernmental agreements and relations with major importers. Our goal is to ensure that this is beneficial,” Kudrin emphasized.

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