Russian Ruble Hits the Highest Level Since March
On Thursday, the Russian ruble temporarily reached its highest level against the U.S. dollar since March 2020, aided by capital controls. Meanwhile, stock indexes rose as investors awaited news of possibly additional penalties against Moscow.
The volatile currency reached a high of 65.31 per dollar in early trading on the Moscow Exchange. By 1339 GMT, it traded at 66.14, 0.2 percent higher than its Wednesday closing level.
The ruble has risen in value in recent weeks due to export-oriented enterprises required to convert foreign currency. In addition, demand for dollars and euros has been weak since imports have declined and cross-border transactions have been restricted.
The ruble’s movements are more pronounced than usual because central bank regulations have reduced market liquidity to bolster financial stability following Russia’s tens of thousands of troops into Ukraine on Feb. 24.
Meanwhile, trading activity is low because the markets are only open for three days this week, smack dab in the heart of Russia’s long May holidays.
The ruble was 1% firmer against the euro at 69.77, lingering around levels last seen in February 2020. The ruble reacted little to the United States Federal Reserve’s decision to raise its benchmark overnight interest rate by half a percentage point, the most significant increase in 22 years.
Sanctions and investment restrictions affected the direct influence of U.S. monetary policy on the Russian economy, according to Dmitry Polevoy, head of investment at LockoInvest. However, Russia would continue to face the effects of global inflation and commodities prices.
Russian stock indices were up. US dollars’ RTS index (.IRTS) increased 2.7 percent to 1,144.0 points. The ruble-based MOEX Russian index (.IMOEX) increased by 1.2 percent to 2,402.0 points.
On Friday, the dollar was on track for a fifth consecutive week of gains against major rivals; the currency was ahead of a much-watched U.S. employment report that should support the case for rapid monetary policy tightening.
The dollar was up against the yen for the ninth week as benchmark U.S. Treasury yields resumed their rise — topping 3.1 percent overnight — after a brief dip after the Federal Reserve raised interest rates by half a percentage point mid-week.
The euro fell 0.11 percent to $1.0529 on Friday, bringing its weekly loss to 0.12 percent. Still, the currency has generally moved flat after falling to a five-year low of $1.04695 last week.
Sterling fell 0.05 percent to $1.23475, down 1.81 percent for the week. It fell 2.22 percent overnight, the biggest in two years, as the Bank of England warned of the potential of a recession while raising interest rates by a half-point.
Bitcoin fell 0.84 percent to $36,225, extending its 7.94 percent drop from the previous session when it hit a low of $35,579.40, a level not seen since late February.