The ruble, the national currency, which was not inspired by the Russian default earlier in the week, hit new highs last night against the major currencies, the dollar and the euro. “For the first time since May 28, 2015, the dollar has depreciated by 52 rubles. For the first time since May 26, 2015, the euro has fallen below 55 rubles,” Interfax news agency reported after the close of the Moscow Stock Exchange on Tuesday.
Agency monetary experts point to the upcoming tax in Russia and higher oil prices as reasons for the ruble’s strength. After a sharp fall shortly after the start of the war of aggression ordered by Kremlin leader Vladimir Putin, the ruble has been on a recovery trajectory for several months and has now reached a two-fold low.
Unchecked ruble increase
Even Russia’s technical default, as determined by rating agency Moody’s on Tuesday, had no effect on the ruble. Admittedly, this is not a common state bankruptcy, but rather technical problems in the transaction of credit, prevented by the West.
However, the background to the strength of the ruble is the severe restrictions on foreign exchange transactions by the Russian central bank and Western sanctions, which primarily affect Russian imports. This is because while Russia’s revenue from oil and gas exports continues to bubble, imports into Russia have fallen by less than half – due to the Western ban on high technology, machinery, weapons and luxury goods. Thus the demand for foreign exchange has also been greatly reduced. (SDA)
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