The Russian Ruble Strengthened Against the Dollar

The Russian ruble rose on Monday, returning to multi-year highs against the dollar and euro set last week, aided by capital controls and a month-end tax period.

The ruble was 2.5 per cent firmer against the dollar at 58.74 at 0754 GMT, not far from 57.0750, its highest level since late March 2018, reached on Friday. It was up 2.3 per cent against the euro; the currency traded at 61.38, close to its highest level since June 2015 of 59.02, also reached on Friday.

Despite a full-fledged economic crisis in Russia, the ruble has firmed about 30% against the dollar this year; this made it the world’s best-performing currency; however, it had controls imposed in late February to protect Russia’s financial sector after it sent tens of thousands of troops into Ukraine. The ruble was drive-by for export-oriented firms; it helped convert their foreign currency receipts after Western sanctions froze nearly half of Russia’s gold and forex reserves.

Analysts stated last week that Russian demands that international customers pay for gas in rubles had also contributed to the ruble’s recent surge.

The Russian currency is being supported by the availability of foreign currency from exporters, high oil prices, and an imminent month-end tax period; these usually motivate export-focused enterprises to convert their forex income into rubles to satisfy local responsibilities.

Central Bank Opinion

The central bank refuted the report, which stated that “this information does not correspond to reality.”

If the central bank took such actions, the impact on the ruble rate would be more visible.

US dollars’ RTS index (.IRTS) was up 2.2 percent to 1,277.2 points. The MOEX Russian index (.IMOEX) fell 0.4 percent to 2,364.3 points in rubles.

The president of the European Central Bank said policymakers would likely raise interest rates out of the negative territory by September; hence, the euro rose on Monday; meantime, the dollar continued its recent decline.