Russia did not introduce rubles in Kherson Region on 1 May despite announcements

Serhii Melnyk – Thursday, 5 May 2022, 18:55

Despite Russia’s announcement that the ruble will be put in circulation in the Russian-occupied territories of Ukraine on 1 May, Ukrainian hryvnia still remains the only currency in circulation, write Yaroslav Vinokurov and Olha Kyrylenko. 

Late in April, Russian media shared an announcement by a Russian-appointed Kherson Region "official" in which it is stated that on 1 May, the Russian currency – the ruble – would be put into circulation in the region.

As of 4 May, Ekonomichna Pravda sources in Russian-occupied cities of the Kherson Region said they had not yet seen any signs of transition to Russian currency.

"Mostly in the cities we have only one currency now: hryvnia. There was only the announcement by the ‘head’ of the ‘Kakhovka Administrative District’ regarding the fact that we would have to ‘put the Russian ruble into circulation’. But we have not yet received any payments or pensions in rubles," said Viktor, from Nova Kakhovka.

Ihor Kolykhaiev, Mayor of Kherson, confirmed that the ruble has still not been put into circulation in the Russian-occupied territories.

"The ruble is not in circulation yet. Soldiers of the Russian army get paid in rubles, but then they go to a currency exchange and exchange those rubles. The hryvnia and the dollar are in circulation," he noted.

There are rumours among the residents of smaller towns in the Kherson and Zaporizhzhia Regions that small stores and gas stations on the outskirts of Russian-occupied cities and near the administrative border with Crimea are already accepting rubles as payment, or have announced their intentions to do so. However, none of the people interviewed by Ekonomichna Pravda reporters have personally experienced or witnessed this.

Introducing a "ruble zone" has been a characteristic phase of Russian occupation of other countries’ territories. The same measures were implemented during the war in Georgia. In Ukraine, Russia put the ruble into circulation almost immediately after the so-called "referendum" in Crimea; likewise, in the Russian-occupied territories of the Donetsk and Luhansk Regions.

Introducing its own currency in the occupied territories offers no economic advantage to the Russian Federation.

The only possible advantage to introducing the ruble in Ukraine territories that have been temporarily occupied since 24 February may be the expansion of markets for some Russian producers. These producers will be able to sell their products in occupied Ukrainian towns and cities. This benefit is rather illusory given the constant fighting. Moreover, only a few companies close to the Kremlin will be able to take advantage of it.