Agencies-Gaza post
Ruble rally continues to defy sanctions
The Russian currency strengthens to a fresh 7-year high against the US dollar and the euro
The Russian ruble continued to appreciate on Tuesday, gaining over 1% against both the US dollar and the euro, trade data on the Moscow Stock Exchange showed.
At the opening of the session, the dollar fell below 55 rubles for the first time since June 30, 2015. The euro was also trading at a seven-year low against the Russian currency, below 58 rubles per euro.
The ruble is gaining strength against the world’s two main reserve currencies ahead of high tax payments and high prices in commodity markets. Russian exporters sell foreign currency to pay taxes in rubles at the end of June. The peak will be on the 27th-28th. June is expected, and analysts predict that the ruble will continue to rise in the coming week, rising to 50 rubles against the dollar and 55-56 against the euro.
However, other experts assume that the ruble could sink in the longer term. It will depend on the state of the Russian economy and, most importantly, the activation of imports – as soon as they start to rise, demand for the currency will also increase, weakening the ruble from current levels.
The ruble fell to record lows in March amid pressure from Western sanctions but has since more than doubled on the back of tight central bank capital controls, rising global energy prices, and Moscow’s gas payment demand, which forces “unfriendly” countries to pay for natural gas supplies in rubles.
However, last week the head of Russia’s central bank called for most capital controls to be lifted in a bid to weaken the national currency as the government believes the ruble is too strong at the moment. This could be bad for Russia’s budget, which receives significant revenue from energy taxes in foreign currency but spends it in rubles.
Source: here
