Russian Sanctions and Unintended Consequences: Rise of Rouble-Based Trade?

Image: Typical FT (Financial Times) headlines on Russian currency, date: 23 March 2022

Last update: 1 April 2022

Some days back a former top forex trader colleague at HSBC Global Banking and Markets and now a monetary economist at a think tank remarked recently that following Russian Central Bank's dollar asset freeze order by US, it is only a matter of time that Russia would be forced to go for trading with the west in rouble only or joint rouble–yuan currency mechanism only, to ensure it remains 100% risk free from sanctions and asset freezes, despite potential inflationary and monetary related risks associated with it. In fact, Financial Times reported Russia is seriously considering to trade gas with Europe in roubles only or as President Putin puts it “The collective west has killed all trust in their currencies.” As if this wasn’t enough, Russian central bank announced that it is in process to back rouble in some form or shape with gold standard with immediate effect.

India, one of…