war in Ukraine. Did Putin win the battle for the ruble despite the sanctions?

The ruble, which fell after the invasion of Ukraine, has regained strength. Are we to conclude that Western sanctions are ineffective? Here are some answers.

Where is the ruble rate?

The Russian currency, which had lost a third of its value against the euro, made up ground. One ruble is worth 0.011 euros, the same as on the eve of the invasion of Ukraine.

Why are we talking about this again?

Because part of the Western sanctions should prevent the rise of the ruble in order to weaken Russia. For example, it was forbidden to use foreign exchange reserves held abroad in euros or dollars. So the Westerners wanted to prevent it from buying rubles to increase its currency. But Vladimir Putin’s countermeasures have had an effect,” observes lawyer Olivier Dorgans, who specializes in economic sanctions.

One ruble is worth 0.011 euros, the same as on the eve of the invasion of Ukraine. | BY INFOGRAPHIC SERVICE

How did Russia react?

For example, it has forced Westerners to pay for Russian gas in rubles. And the latter are currently running due to the lack of an alternative solution. The buyer needs to open two accounts with Gazprombank: one in euros and another in rubles, continues the partner of the Ashurst company, transferring the amount to his account in euros. Gazprombank converts it into rubles at the central bank. And the buyer then pays for his gasoline in rubles. Enough to turn billions of euros into rubles. And for individuals, Russia strictly controls capital outflows.

Does this mean Western sanctions have failed?

no In the information war, Putin wants to show that the ruble will remain a strong currency, says Ludovic Subran, Allianz’s chief economist. But it’s an excuse. The Russian economy has been on its knees for a decade. When a state’s budget is used to finance a war, there is no money left for schools, health care, the police. Unemployment rises. The middle class is affected.

As evidence, adds Olivier Dorgans, the World Bank expects an 11% recession in Russia this year. And inflation rose 16% in March. In other words, Ludovic Subran concludes, the sanctions are effective but remain incomplete.

European purchases of hydrocarbons from Russia continue. They represent 21 billion euros per month. Gas volumes imported into the EU via pipeline even increased in March.

war in Ukraine. Did Putin win the battle for the ruble despite the sanctions?