The Russian ruble has surged to a five-month high against major currencies, trading at 90.5 rubles to the US dollar and around 98 rubles to the euro, according to trading data from the Moscow Exchange (MOEX). This comes as the ruble has strengthened by almost 7% over the past month.
Analysts attribute the rally to the recent key rate hike by the Russian central bank, which has led to a reduction in imports and a decline in demand for foreign currency from importers. In addition, a reduction in the budget deficit after a growth in oil revenues has also affected the exchange rate.
Furthermore, increased sales of foreign currency earnings by Russian exporters have bolstered the ruble. On October 12, a mandatory measure ordering exporters to sell their foreign revenues and repatriate the proceeds was announced, preventing exporters from engaging in speculative currency trading.
According to Evgeny Kogan, an investment banker and professor at the HSE Research University, the requirement for exporters to provide a plan for the purchase and sale of currency for the future has deprived them of the ability to engage in currency speculation.
With this backdrop, analysts expect the ruble to remain stable and strengthen slightly in the next five months. Some analysts predict that the ruble is likely to surpass the symbolic threshold of 90 rubles to the dollar, with PSB chief analyst Evgeny Loktyukhov forecasting that the ruble could grow beyond this mark ahead of tax payments by Russian exporters on November 28.
The strengthening of the Russian ruble has significant implications for the country’s economy and its trade relationships with other countries. A strong ruble can make imports more affordable for Russian businesses and consumers, while it can also make Russian exports more expensive for foreign buyers.
In addition, the strength of the ruble reflects the overall economic health of the country. As Russia’s oil and gas revenues hit an 18-month high, the country is showing signs of economic growth and stability. This, in turn, can attract foreign investment and contribute to stronger economic ties with other countries.
The strengthening ruble also has implications for Russia’s monetary policy and its approach to managing its currency. The recent key rate hike by the central bank demonstrates a commitment to maintaining stability in the currency and the overall economy. It also suggests that the central bank has the tools and resources to manage fluctuations in the currency and respond to economic changes.
Overall, the recent surge in the Russian ruble reflects a combination of factors, including the central bank’s policy decisions, increased sales of foreign currency by exporters, and macroeconomic trends such as oil revenues. As the ruble continues to strengthen, it will be important to monitor its impact on Russia’s trade relationships, domestic economy, and monetary policy.