Turkey is ready to sign a deal promising to pay for 25% of its Russian natural gas imports in rubles, President Vladimir Putin said on Friday.
Putin announced the deal during a meeting at the Shanghai Cooperation Organization summit, Reuters reported. He did not specify when the deal would happen, but noted that it would happen “in the near future.”
Russia has been struggling to secure similar payment transactions since it was hit by Western sanctions and is struggling to secure cash flows as it remains outside international payment networks.
China, one of Russia’s biggest buyers of fuel, has agreed to pay for gas mainly in yuan and rubles. India, another major buyer of Russian fuel, was due to strike a deal in July agreeing to pay for supplies in the UAE currency rather than US dollars.
And Russia is also willing to punish its other natural gas customers for not meeting its payment demands. Flows from Poland and Bulgaria were halted earlier this year after the countries refused to pay in rubles, and that cut supply to one Asian customer for not signing a contract agreeing to pay in currencies other than the US dollar.
These measures increased the demand for the Russian currency. The ruble has so far gained 40% since the start of the war – but some experts believe this could be a headwind for the Russian economy, as a dearer ruble means less demand for oil and gas exports, which account for almost half. its GDP.
Russia’s central bank cut interest rates by 150 basis points in July to curb the value of its currency and also offered deep discounts to its Asian energy customers. The Russian central bank later added that it was interested in increasing its reserves of Chinese, Indian and Turkish currencies and moving away from “toxic” currencies, particularly the US dollar and the euro.