Russian President Vladimir Putin announced on Thursday that Russia is to halt gas contracts if buyers don't pay in roubles, reported Bloomberg. Active contracts will be immediately halted if these demands are not met, Putin continued, noting that buyers of gas should open accounts in Russian banks. Putin said that he had signed an order on these new gas trading rules, which come into force as of 1 April. Putin pledged that Russia would continue providing gas at the already set volumes and prices and will move to increase settlements in national currencies.
Putin explained that by continuing to sell gas in euros and dollars, assets that could easily be frozen by the West, Russia deems the risk of providing gas for free as unacceptable. The switch to rouble payments is meant to strengthen Russia's sovereignty, he continued, before lambasting Europe for being ready to ignore the interests of its own citizens.
Market Reaction
The euro weakened in response to Putin's remarks, as the new order that gas payments must be made in roubles raises the risk that Russia cuts gas payments to the Eurozone, which would likely trigger a recession. EUR/USD dipped under 1.1100 as a result and is now trading in the 1.1080s and down about 0.6% on the session.
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