Russia will force Europe to start paying for gas supplies in rubles, President Vladimir Putin said Wednesday in televised remarks.

“I have decided to implement a set of measures to transfer payments for our gas supplies to unfriendly countries into Russian rubles,” Putin said, ordering the changes to be implemented within a week.

The measures are part of Russia’s response to the West’s unprecedented sanctions leveled on Moscow in response to the attack on Ukraine.

Russia deems all countries that have hit it with sanctions following its invasion of Ukraine as “unfriendly.”

Europe imports around 40% of its natural gas from Russia, with contracts typically priced in euros. Russia’s gas exports to “unfriendly” countries came in at around $50 billion in 2021, according to an estimate by Loko Invest.

“It doesn’t make sense to deliver our goods to the EU or U.S. and receive payments in dollars or euros,” Putin said in the meeting with government officials.

The move was met with pushback Wednesday evening from some of Russia's key gas customers, including Germany, Austria and Italy.

Berlin said Russia's demands constitute a breach of contract, while Vienna and Rome both said they would continue paying for Russian gas in euros, citing Moscow's attempt to skirt the impact of sanctions.

"The announcement of paying in rubles is ... a breach of the contract and we will now discuss with our European partners how we would react to that," said German Economy Minister Robert Habeck, whose country imported 55% of its natural gas from Russia before Moscow invaded Ukraine.

Analysts see Putin’s move as Moscow’s attempt to put pressure on Europe over its sanctions — or “turn the tables on the EU,” as Elina Ribakova, deputy chief economist and sanctions expert at the Institute of International Finance, said.

In sanctions on Russia’s Central Bank, the West has frozen almost half of Russia’s international reserves — some $300 billion that Moscow had seen as its anti-sanctions insurance policy, huge funds that could be used should it be cut out of the financial system.

If Putin’s order is implemented, Europe would have to buy hundreds of millions of euros’ worth of rubles every day to pay for its substantial gas deliveries. From Russia’s perspective, that would provide an inflow of much-needed hard currency and boost demand for the beleaguered Russian currency.

But transactions could prove tricky for Europe as many Russian state banks, including the Central Bank itself, are under sanctions which prohibit direct transactions.

“He is basically trying to get Western countries who sanctioned the Central Bank to transact with it,” said analyst Timothy Ash. “But this will just make it more difficult to transact with Russia for energy supplies.”

The Russian ruble, whose value cratered in the wake of the sanctions, jumped on Putin’s announcement, strengthening by almost 4% against the U.S. dollar in trading in Moscow. Prices for gas in Europe rose 8%.

Russia is currently requiring exporters to sell 80% of their hard currency earnings — effectively using its extensive export earnings to replace the Central Bank’s frozen reserves and stop the Russian ruble from falling even further.

Maria Shagina, a visiting senior research fellow at the Finnish Institute of International Affairs, branded the announcement an “unexpected turn from the Kremlin.”

“I tend to think this is another bluff. Receiving hard currency from hydrocarbons is much more important now than forcing all ‘unfriendly’ countries to purchase rubles,” she told the Moscow Times.

Some analysts also questioned whether switching the payment currency would be permitted under existing contracts signed between Gazprom, Russia’s monopoly gas exporter, and customers in Europe.

“The very tight gas market will force European customers to abide by this. There is a lack of alternatives: buy rubles or stay without Russian gas,” said Shagina.

Europe has come under heavy pressure to stop buying Russian oil and gas — a key source of income for the Russian economy — since the invasion of Ukraine began.

Moscow has also sought to use energy prices to pressure Europe, with several politicians, including Putin himself, saying Western sanctions have created a cost of living crisis in the West by way of soaring energy prices.

AFP contribued reporting.

Today (24 March), Mongolia’s central bank has lifted the country’s key interest rate by 2.5 percentage points to 9 % in a desperate move to halt the home currency’s decline amid Russia-Ukraine crisis.

Four days after Russia invaded Ukraine on February 24, the governor of the Bank of Mongolia (BoM), B.Lhagvasuren, told reporters that the national lender boasted USD 4.3 billion in reserves as of the start of 2022, and that the reserves were more than enough to cover seven to eight months. Yet there have been instances of bank customers blocked from making foreign payments of more than MNT 4 million (less than USD 1,700) and prevented from obtaining more than USD 1,000 per day.

Customers were informed by their banks that the central bank had set limits on foreign exchange transactions. However, the BoM suggested that individuals banks may have set their own limits on the amount of dollars that can be withdrawn, taking account of their internal reserves.

The Ukraine crisis is putting Mongolia’s economy to crisis. Inflation has hovered around 13 percent since January and in February it topped 14 percent. Since the start of the Ukraine war, the Mongolian Tugrik has dramatically fell against US Dollar from USD 2,842 to USD 3100.

Mongolia reported 55 new cases of COVID-19 infection, including 45 in Ulaanbaatar and 10 in regions, the Health Ministry said on March 24.

93 hospital patients are in mild condition, 253 are in moderate condition, 57 are in serious condition and 19 are in very serious condition.

No new deaths from COVID-19 were reported in the country during the past day. The death toll stands at 2,108.

The Cabinet discussed how the Russia-Ukraine crisis has been affecting Mongolia's economy at its regular meeting on March 23, reported Minister of Finance B.Javkhlan.

“At each of the Cabinet meetings, corresponding ministries have been presenting possible ways to keep the negative effect caused by the Russia-Ukraine conflict at a minimum. Sanctions that have been imposed against Russia are also indirectly affecting the situation in our country to a certain extent.

As it may affect our economy through several channels, the first issue at hand is foreign trade. Petroleum makes up 75 percent of the products being imported from Russia.

Rosneft is currently supplying petroleum products according to the agreement. From our side, importers have been making their payments without any issue. As USD 180 million worth of petroleum has been purchased since February 24, we will put in efforts into continuing to keep this amount.

In terms of foreign policy, Mongolia continues to keep the same stance as when we voted to abstain during the recent UN resolution.

Furthermore, the policy on maintaining foreign exchange reserves and supporting exports will continue to be implemented."

At a regular meeting of the Cabinet on March 23, Minister of Health S.Enkhbold did a presentation on the preparations underway for the works to be carried out to involve citizens in early-detection checkups from May 1.

Adults will be involved in 19 types of medical checkups.

The medical checkups that are being planned include the diagnosis of cardiovascular disease, diabetes, and tuberculosis, assessment of mental and general physical health, blood and urine tests, glucose, pap smear, hepatitis B and C, rapid tests for syphilis and HIV, electrocardiogram, endoscopy, gastroscopy, and ultrasound tests for the chest and abdominal areas as well as thyroid.

As for children up to the age of 18, they will be involved in six types of medical checkups. This will include diagnosis of non-infectious diseases, mental health assessment, dental checkup, eye exam, and tuberculosis test.

While an average of MNT 11.2-12.3 million is spent for the treatment of a single patient, it is estimated that costs are able to be significantly saved by annually involving citizens in MNT 150 thousand worth of tests and diagnosis.

The iron ore price rose on Wednesday despite the decision by top steelmaking city Tangshan to implement a temporary lockdown.

The Tangshan government implemented the lockdown on Tuesday to avoid further cases of covid-19 as infections surged, the local government said in a statement.

“Although consumption for steel products are relatively sluggish, production is also falling,” analysts with Huatai Futures wrote in a note.

The situation of tight raw materials inventories has not been reversed yet, which could further sustain steel prices, analysts added.

According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $145.49 a tonne on Wednesday, up 1.4% compared to Tuesday’s closing.

Steelmaking ingredients on the Dalian Commodity Exchange were mixed after falling more than 3% during the night session, with benchmark iron ore edging up 0.4% to 823 yuan a tonne.

“Due to transportation disruptions, most steel mills face raw material shortages … and there’s even possibility for production halt,” said Huatai Futures, noting that iron ore demand will be dampened.

($1 = 6.3743 Chinese yuan renminbi)

(With files from Reuters)

The economic ramifications of Russia's invasion of Ukraine and the West's imposition of heavy sanctions on Moscow in response to it are starting to unsettle Mongolia.

Four days after Russia invaded Ukraine on February 24, the governor of the Bank of Mongolia (BoM), Lhagvasuren Byadran, told reporters that the national lender boasted $4.3bn in reserves as of the start of 2022, and that the reserves were more than enough to cover seven to eight months. Yet there have been instances of bank customers blocked from making foreign payments of more than Mongolian tughrik (MNT) 4mn (less than $1,700) and prevented from obtaining more than $1,000 per day.

Customers were informed by their banks that the central bank had set limits on foreign exchange transactions. However, on March 21, BoM provided a statement to Ikon, a local news agency, in which it said that there was no limit placed on FX. It stated: "The Bank of Mongolia has not imposed any limits on foreign exchange transactions. It is misleading for the managers of these banks to convince their clients that the Bank of Mongolia has placed such limits. The Bank of Mongolia will send a warning to the banks that have decided to restrict foreign exchange."

BoM suggested that individuals banks may have set their own limits on the amount of dollars that can be withdrawn, taking account of their internal reserves.

Whatever the facts here, there is no doubt that the Ukraine crisis is putting Mongolia's economy to the test. Inflation has hovered around 13% since January and in February it topped 14%. The central bank said in early January that inflation would move down as soon as exports picked up again, but China’s strict “zero-covid” policy continues to make it difficult for Mongolia to ship minerals and coking coal to its giant neighbour, putting a big dent in the country's economic performance.

Since the start of the Ukraine war, the MNT has dramatically depreciated from 2,842 to the USD to 2,910. Given global price hikes, the central bank is now examining the next step it could take to ensure that the national currency does not depreciate further. It remains adamant that it does not want to deploy reserves to strengthen the tughrik. But the situation is worsening. Some FX outlets have stopped selling dollars or are selling for at least MNT 3,100.

There are also tales of people swapping huge sums of rubles for USD.

At a press conference called to address public anxiety over inflationary pressures, Lhagvasuren said: “Uncertainty has arisen in the economy. In 2021, the balance of payments showed a deficit of $220mn. This year we started out in the first month with a $500mn deficit. This was due to a growth of imports, post-Covid economic growth. And with this war it is certain that the balance of payments will be in deficit by the end of the year.”

After the conflict broke out, and Russia's ruble sank in the face of the sanctions response, some Mongolian economists called for the exchange of rubles to be stopped, but BoM did not issue an ordinance. The central bank, though, has made it clear that the exchange of rubles in the country has increased since the invasion. It said: "If we look at the average amount of ruble transactions from 2019 to the present, a maximum of $30mn in rubles has been used for payments and exchanges in the country [on a monthly basis]. A total of $92mn worth of ruble transactions were made from the beginning of this year till March 18. Also within this time, the amount of rubles purchased amounted to $4.2mn. This shows that the amount of rubles bought by banks on the domestic market is much lower than the amount sold."

To preserve the reserves, BoM is working on limitations—one restriction could see limits placed on the importing of luxury goods including cars—and will monitor certain transactions. “Only by supporting exports will we be able to have certain foreign exchange reserves. Steps need to be taken to bring mining products to the market. At today's auction, banks applied for $162mn, but we submitted $50mn,” the central bank noted on March 22.

Banks, the central bank said, used to send in information on FX payments once a month. “However,” Lhagvasuren added, “we now receive daily information on any transactions worth more than $50,000, to exercise control over the purposes for which [hard] currency is transacted to abroad. A contingency plan is required if the MNT continues to depreciate."

Lhagvasuren also suggested that for Mongolia to maintain steady economic progress, the government must postpone some of its objectives. “Some of the state budget investment needs to be postponed this year,” he said. “There is a need to reduce costs that can't be borne, [such as with] construction work that has not yet been commissioned.”

BY Anand Tumurtogoo in Ulaanbaatar

March 23 (Xinhua) -- From 2018 to the end of February 2022, a total of 364,000 tonnes of fruits and vegetables were exported from China to Mongolia via the border port of Erenhot in north China's Inner Mongolia Autonomous Region, according to the Erenhot Customs.

The total trade value of fruit and vegetable exports to Mongolia through the port reached 423 million yuan (about 66.4 million U.S. dollars).

In 2018, a green channel for agricultural products was launched, which has since been putting more than 30 kinds of fruit and vegetables, including apples, oranges, lemons, onions, peppers and cucumbers, on the tables of Mongolian people.

Thanks to this green channel, the average customs clearance time for fruit and vegetable exports has been reduced to 30 minutes.

Erenhot, the largest land port on the China-Mongolia border, supplies about 80 percent of Mongolia's fruit and vegetables.

Deputy Prime Minister of Mongolia S.Amarsaikhan received ADB Country Director for Mongolia Pavit Ramachandran, ADB Senior Urban Development Specialist A.Heckmann and Ger areas development project coordinator D.Avirmed.

Over the past 28 years, the Asian Development Bank has issued a total of USD 3.9 billion in funding to Mongolia by providing substantial support in wide range of areas including education, health, society, economy, infrastructure, urban planning, and green development aside from the assistance during COVID-19 pandemic.

Commending the timely implementation of appropriate measures in the fight against the pandemic taken by Government of Mongolia and National Emergency Commission Agency, which made it possible to move back to normal life, recovering its economy, ADB Country Director for Mongolia Pavit Ramachandran expressed commitment to expand the cooperation with Mongolia and promote the ‘New Revival Policy’ being implemented by the Government.

ADB expressed an interest to cooperate in projects and programs including Satellite city to be established in Khushig Valley, public transport modernization, as well as ‘Green growth recovery’ and 'Urban and rural revival' to be implemented in the framework of the ‘New Revival Policy’.

“With the establishment of the Bayankhoshuu and Selbe Sub-Centers, some works reflected in the affordable housing program are planned to be realized and its construction work will be launched this spring. I am pleased to inform that Bayankhoshuu and Selbe Sub-Centers project being implemented within the framework of the ‘Ulaanbaatar Urban Services and Ger Areas Development Investment Program’ (GADIP) has become international benchmark. Further, the feasibility study for the ‘Rural development’ project to be implemented in 8-9 aimags was approved and its financing was resolved. Within the framework of the project, small and medium-sized enterprises, including processing plants, will be promoted, creating more jobs in the local areas. Therefore, it should be decided by the Government in which aimags the project will be implemented,” said ADB Senior Urban development Specialist A.Heckmann.

Deputy Prime Minister of Mongolia S.Amarsaikhan noted “We became able to move into ‘Yellow’ level thanks to the five-phase strategy measures implemented by the Government and the support of people during Covid-19 pandemic. I would like to express my appreciation to the ADB for making valuable contribution in overcoming the Covid-19. We fully agree with suggestions put forth by the ADB on the successful implementation of projects and programs of the ‘New Revival Policy’. In particular, the development of satellite cities is a priority to reduce the centralization and traffic congestion of Ulaanbaatar city. Therefore, we are willing to co-implement the projects and programs towards the establishment of infrastructure, affordable housing and free economic zone.”