Schedule ruble to dollar intervals of 1 day
International sanctions against Russia have pushed the ruble to a record low of 121.5 rubles to the dollar, evoking memories of how the Russian currency suffered during the 1998 financial crisis.
Everything looked so terrible that US President Joe Biden compared the weakening of the ruble to a stone falling down.
Now, however, it certainly looks different. The ruble returned to the level that it was before the start of the special operation, closing on Wednesday, March 6, at around 79.7 in trading in the currency section of the Moscow Exchange.
It has become clear that, despite an incredibly broad package of sanctions against the Russian government and oligarchs, as well as a massive exodus of foreign companies, the restrictions will largely be toothless if foreigners continue to buy Russian oil and natural gas – supporting the ruble.
While Russia remains largely cut off from the global economy, Bloomberg Economics expects the country to earn nearly $321 billion from energy exports this year, more than a third more than in 2021.
The rapid recovery of the ruble gives Vladimir Putin a major victory in Russia, where many people are obsessed with the currency’s ups and downs.
“For politicians, this is a good PR tool, declaring that sanctions do not affect anything. And that will help limit the impact of inflation,” said Guillaume Tresca, senior emerging markets strategist at Generali Insurance Asset Management.
In Russia’s post-Soviet history, the exchange rate of the ruble against the dollar may have been the economic indicator that Russians care about the most. The rate was broadcast by exchange offices that sprang up in every city, marking the collapse of the currency when hyperinflation hit in the early 1990s. The ruble fell again after the Russian default in 1998.
As soon as this chaos subsided, the government cut off three zeros on banknotes. Then, during the 2008 crisis, the authorities burned billions of dollars to slow the fall of the currency, in part so as not to scare the population and provoke a run from national banks.
The head of the Central Bank of the Russian Federation, Elvira Nabiullina, decided to take a chance in 2014, when sanctions due to the annexation of Crimea and falling oil prices prompted her to float the currency.
In response to sanctions imposed this year, Russia has introduced capital controls that also seem to support the ruble. These measures include freezing assets owned by non-resident investors and directing Russian companies to convert 80% of the foreign currency they hold into rubles.
This leaves some observers questioning the significance of the ruble’s recovery to pre-invasion levels, which also comes amid the lowest trading volume in a decade.
“This is not a free floating currency, given all the measures that the authorities have put in place,” Tresca said.
US Treasury Secretary Janet Yellen said much the same when she testified before Congress on Wednesday, warning against deeper sanctions over the ruble’s recovery.
Still, it’s hard to ignore the lifeline that other countries are throwing at Russia by buying gas and oil from it. This gives Russia a current account surplus — in economic jargon, it means more exports than it imports, which tends to appreciate the value of the national currency — and undermines attempts to hurt Russia with sanctions.
“The current account surplus should be another source of ruble stability,” said Brendan McKenna, strategist at Wells Fargo Securities LLC. “If energy prices remain high and major importers of Russian energy and goods continue to buy, the current account should remain in surplus.” He says the ruble could rise to 78 to the dollar in part because of Russia’s counter-sanctions.
Russia has managed to stabilize local markets and even prevent a default abroad, at least for now. This means that if a coalition of governments opposed to Russia wants to hurt the ruble again, they will most likely have to change course. Just this week, the US Treasury banned the payment of dollar debts from Russian accounts in US banks in an attempt to force Russia to deplete its domestic dollar reserves or default.
“As the Russian economy and financial sector adjust to a new balance of capital controls, regulated prices and economic autocracy, it is not surprising that some domestic markets are stabilizing,” said Institute of International Finance economists Elina Rybakova and Benjamin Hilgenstock. . “Sanctions have become a moving target and adjustments will be needed over time to remain effective.”
They pointed to the possibility of tougher financial sanctions, perhaps even cutting off additional Russian institutions from SWIFT, the communications system that banks use to move money around the world.
According to Bloomberg
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