Russian ruble linked to gold

In 2022, it was confirmed that Russia intends to back the Russian rouble with gold and some other commodities. In 2024, this peg became a reality, affecting not only Russia's economic policy but also international monetary and trade systems.
 
Why was the rouble pegged to gold, what does this mean for the value of the rouble internationally and what is its impact on international trade? We tell you more about this.
 

The pairing of rouble and gold

The decision to peg the ruble to gold caused the ruble to appreciate 20% within days. Gold is traded in US dollars so there is also a new floor price for the ruble against the US dollar. This peg will cause the ruble to appreciate and it will strengthen and stabilise. This decision is partly a strategic move by the Russian Central Bank to control inflation and strengthen confidence in the ruble. 
 

Why the pairing of roubles with gold?

Er zijn verschillende economische motieven achter de beslissing van Rusland om de roebel aan goud te koppelen. Goud wordt gezien als een stabiele waardeopslag die in tijden van economische onzekerheid en volatiliteit veiligheid biedt. Door de roebel gedeeltelijk op goud te baseren kan de inflatiedruk worden verminderd en wordt de economische stabiliteit versterkt terwijl de afhankelijkheid van de Amerikaanse dollar ook omlaag gaat. Dit zou een belangrijke strategische zet kunnen zijn in de context van geopolitieke spanningen en economische sancties die door westerse landen aan Rusland zijn opgelegd.
 
Besides strengthening the rouble, a key motivator is gas and oil trade. Russia only wants gas to be purchased with the rouble. By linking it to gold, it can also be accepted as a means of payment. Gold becomes a valid medium of exchange again.  
 

What does this do to the ruble exchange rate

The impact of pegging gold to the ruble on the ruble exchange rate depends on a number of factors. Certainly if Russia's gold reserves continue to grow and the gold price rises, the peg will increase the value of the ruble. In the long run, this makes the ruble more valuable and also more stable.  
 
The perception of international markets also plays a role. As the rouble is linked to gold, as well as commodities, world trade systems are changed and monetary reform accelerates. Physical gold can be exchanged for oil and gas. And if the rouble is linked to gold, the rouble is worth gold for short. This could lead to potential fluctuations in other currencies and shifts in capital flows.
 

What this does to international trade

The coupling of the rouble to gold has significant implications for international trade because Russia is one of the world's largest exporters of energy resources such as oil and gas. For these commodities, Russia wants to receive only roubles. But by linking the rouble to good, they are signalling that they want to receive roubles (or gold) for all their exports in the future. 
 
One consequence for international trade is that more physical gold will flow into Russia. As demand for physical gold rises, paper gold markets may actually collapse. Indeed, in London and New York, gold is widely traded in the form of futures contracts rather than with physical investment gold.  
 
Another consequence could be that trading systems will move away from the US dollar. The outcome of the US elections on 5 November will also play a role in this. 
In addition, a shift away from the USD also means more trade in gold, commodities and other currencies between non-Western countries. Russia has effectively created a new position for itself in the international market that could lead to new geopolitical balances of power. There is still much speculation in the Western media about what exactly this shift will mean.