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Russia Reintroduces the Gold Standard to Stabilize the Rouble

Since the inception of the Russia-Ukraine conflict, Russia has been instrumental in making decisions that are reshaping the global financial system. This includes limiting access to energy supply in Europe, reducing dependence on the US dollar, and demanding payment form foreign governments in Roubles.

Through invasion, ongoing war, western sanctions, and rigid international relations, Russia, in an aggressive move, has demanded the Rouble be used in trade for Russian natural resources. This is being done to reduce dependence on dollar denominated transactions. However, Russia is also reintroducing a gold standard to the rouble in an effort to stabilise it, as the nation gears up to shake up the international markets, including the bullion trade. 

Russia Linking Their Rouble to the Gold Standard 

Due to the ongoing geopolitical conflict and bold, strategic moves to strengthen the nation's international presence, Russia's gold market is in a dubious state due to uncertainty about the fallout from the current situation. 

Russia has decided that the US dollar will no longer be an acceptable payment for any natural resources that the nation sells, including oil and natural gas. This will result in countries purchasing the rouble in order to continue trade, whih will increase the strength of the Rouble.

The Russian Central Bank recently announced that the nation would introduce a 'gold parity' by fixing the price of gold at 5,000 roubles per gram. This will benefit Russia because their gold will be cheaper for foreign markets. Any internationl companies looking to procure gold or palladium from the former Sovier country will be required to complete their purchase in Roubles. As Russia has fixed the price per gram, for example, every troy oz of gold or 31 grams, would cost around 160,000 Roubles. By pushing foreign nations to accept the rouble instead of the dollar, Russia has positioned itself in a strategic position to boost the strength of its currency. 

How Is Russia Planning To Link The Rouble To Gold Price?

The Russian government plans to enact certain steps to boost the presence of the rouble. First, they plan to offer a premium fixed price for gold to local Russian banking and financial institutions. This is to facilite trade in light of international sanctions and current market restrictions. Russia also plans to strengthen its currency by ensuring payments are in the rouble. As Russia supplies gas to many European countries and other regions, and Europe in particular is dependant on Russian resources, accepting the rouble as payment will further drive its value, and increase the relevance of the Rouble on the global scale. 

Conclusion

By making the rouble a necessary currency for resoucre trade, Russia has taken advantage of the loopholes left by the Western sanctions. As their currency continues to grow strong, irrespective of the economic conflict they face, Russia may just see a day when the rouble takes the place of the dollar.