Lugansk Republic Switches to Ruble Due to Kiev-Imposed Blockade - Kremlin

The transition to the use of the Russian ruble as the base currency in the self-proclaimed Lugansk People's Republic (LPR) is linked to the economic blockade that Kiev has forced upon the region, Kremlin spokesman Dmitry Peskov said Tuesday.

MOSCOW (Sputnik) — As of September 1, the base currency in operation in the LPR is the Russian ruble. Wages, pensions and social benefits will be paid out in rubles. The region's budget as well as all financial and tax filings will also be completed in rubles.

"We are aware of the long-standing economic blockade, economic isolation and exclusion of the region from the Ukrainian economic zone. Of course, a region in an economic vacuum cannot survive. The currencies that are most suitable in a given moment will be used there," Peskov said.

The decision to use the Russian ruble as the primary currency in the LPR was adopted by the Council of Ministers on August 18. Head of the LPR Council of Ministers Gennady Tsyplakov said that the measure was taken in response to the economic blockade from Kiev.

"The ruble, in spite of everything, is the currency that retains its attraction, as it is a currency on which you can rely, and it is therefore natural that, as an international currency, it could be used elsewhere," Peskov added.

In August, transactions in rubles represented about 85 percent of the LPR's foreign exchange market.