Separatist Rebels in Ukraine's Luhansk Switch to Russian Rouble

Pro-Russian rebels in Ukraine's Luhansk region have declared that they are officially switching the official currency to the Russian rouble from the Ukrainian hryvnia, in the lands they hold. The self-appointed rebel council of ministers of the separatist territories announced the change effective as of Tuesday, in a statement on the rebel news outlet Luganskiy Informatsionniy Tsentr.

The pro-Russian rebels in Luhansk, who declared themselves a sovereign state called the Luhansk People's Republic (LNR) last May, rely on deliveries from Russia for a wide variety of commodities. Russia has maintained that its support for rebel-held territories in both Donetsk and Luhansk is purely humanitarian and the convoys do not contain lethal aid. Russian convoys are not internationally monitored, however and Ukraine, NATO and international researchers have repeatedly accused of Russia sending lethal aid and personnel across the vulnerable border between the war-stricken regions and Russia.

The decision to change the currency means all payments for commodities made in Ukrainian hryvnias will be fixed to the price of the same commodities in Russian roubles, according to the official document from the LNR.

The LNR's budget, any tax collection, and payments that rebel authorities make will also now be in roubles, according to Russian news site Gazeta. However, the so-called minister of finance of the LNR, Yevgeny Manuilov, said that the hryvnia will continue to be accepted in shops.

Both the Russian rouble and the Ukrainian hryvnia have become increasingly volatile since the start of the conflict in eastern Ukraine as trade between the two countries was substantially affected, while Russia has had sanctions imposed on individuals and some of its state businesses by the EU and U.S. It has also imposed sanctions on consumer imports from most European countries who have backed sanctions on it.

The Kremlin appears to have welcomed the rebels' decision to fix their economy to the Russian currency, as Dmitry Peskov, spokesman for president Vladimir Putin, told Russian independent news agency Interfax that the move demonstrates that the rouble was desirable irrespective of the crisis. "The rouble, in spite of everything, is a currency that retains its appeal, a currency which you can build on, and, of course, as an international currency, it can be used everywhere," Peskov said.

Interfax highlighted that sources from the other pro-Russian separatist group in Ukraine, the Donetsk People's Republic, had notified the agency last month that they may be also making the rouble their official currency, as it is already the dominant one in use. "More than 80% of the currency turnover and monetary transactions are made in Russian roubles," DNR rebel Andrey Purgin said. Newsweek cannot verify if this claim is accurate.