The Russian rouble briefly leapt to a three-week high past 95 against the dollar before settling close to 100 after the shock announcement by Russian President Vladimir Putin.
President Vladimir Putin has Russia will only accept payments in roubles for gas deliveries to "unfriendly countries", which include all EU members, after Moscow was hit by unprecedented sanctions over Ukraine.
"I have decided to implement a set of measures to transfer payment for our gas supplies to unfriendly countries into Russian roubles," Putin said on Wednesday during a televised government meeting, ordering the changes to be implemented within a week.
He said Russia will stop taking payments in currencies that have been "compromised".
The Russian rouble briefly leapt to a three-week high past 95 against the dollar before settling close to 100 after the shock announcement.
Gas prices rise
Russian gas accounts for some 40 percent of Europe's total consumption and EU gas imports from Russia have fluctuated between 200 million to 800 million euros ($880 million) a day so far this year.
The possibility a change of currency could throw that trade into disarray sent some European and British wholesale gas prices up around 15-20 percent on Wednesday.
"Russia will continue supplying gas in the volumes fixed in earlier contracts," Putin added.
Putin also described as "illegitimate" the freezing of Russia's assets abroad.
He said the United States and the European Union have declared a "real default" on their obligations to Russia.
"Now everyone in the world knows that obligations in dollars can be defaulted," Putin said.