Moscow aims to trim its exposure from to U.S. sanctions.
On Sunday, in a significant development, Russian Economy Minister Maxim Oreshkin stated, Moscow is exploring alternatives to the U.S. dollar for energy transactions and is evaluating currency settlements in euros and roubles in an effort aimed at minimizing its exposure to the United States.
“We have a very good currency, it’s stable. Why not use it for global transactions?” said Oreshkin in an interview with the Financial Times on Sunday. He went on to add, “We want (oil and gas sales) in roubles at some point. The question here is not to have any excessive costs from doing it that way, but if the broad … financial infrastructure is created, if the initial costs are very low, then why not?”
Given the popularity of Russia’s domestic bonds among foreign investors, who own 29% of its rouble debt, Oreshkin stated, Russia will be able to sell its energy exports in local currency.
These “de-dollarisation” efforts are aimed at reducing its exposure to U.S. sanctions.
Following its annexation of Crimea from Ukraine in 2014, Russian assets came under investor pressure following the first round of western sanctions. In 2016, fresh sanctions were imposed by Washington on allegations of interfering in the 2016 U.S. presidential elections as well after the poisoning of a former spy in Britain; both of these accusations have been denied by Russia.
In August 2019, Washington had banned its banks from buying sovereign Eurobonds directly from Russia.
Last month, Russia’s finance ministry had said, Moscow will focus on selling its debt to investors from Asia and Europe and may adjust the currencies of its bond issues.
According to Oreshkin, Russia was aiming to boost its bilateral trade with the European Union, but it is unlikely to readmit EU food exports unless the bloc eases Russia’s access to its market.