The ruble continues to strengthen against the US dollar and the euro, as demand for Russia’s currency rises following its new gas payment mechanism, upcoming corporate tax payments, and capital controls.
The ruble reached a high of 62.0 against the US dollar on Friday, marking the strongest it’s been since March 2018. Russia’s currency also rose another 5% against the euro to 645.6, the highest in seven years. In fact, the ruble has become the top performing currency in the world this year, despite a sudden decline in April following stringent sanctions imposed by the West.
Indeed, the ruble has made sizeable gains since then, largely in part due to new monetary and fiscal policies brought in by the country’s central bank and government. In response to Western sanctions targeting Russia’s financial system, the Bank of Russia prohibited citizens from withdrawing foreign currencies until September 9, and capped the withdrawal limit at $10,000 for those holding US dollar and euro accounts.
Also strengthening the ruble is upcoming tax payments, which normally require additional foreign currency conversions to the ruble. In the meantime, demand for the currency has been rising after Moscow demanded that “unfriendly” nations open accounts at Gazprombank and make natural gas payments in rubles. So far, about half of the 54 Russian gas importers have obliged with the Kremlin’s request, according to Deputy Prime Minister Alexander Novak.
Information for this briefing was found via Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.