Russian Roubles Jumps to more than 6% against Euro
‘Rouble’ is a monetary unit of Russia and Belarus which leaps more than 6% against the Euro on Monday.
This happened for the first time in the last 7 years, which is improved by capital controls, stable out prices and an upcoming month end tax period. Today, the rouble had gathered 6.3% to trade at 58.75 versus the Euro, which happens to be the strongest point since early June 2015.
It marked till 4.6% stronger against the dollar at 57.47, however not far than 57.0750, its strongest mark since March 2018.
We all are well aware about the economic crisis Russia is facing because of the war against Ukraine. Many companies have stopped their exportation and terminated their deals with Russia.
Despite so many problems, the Roubles have leaped about 30% against the dollar this year, which makes it world’s best performing currency.
Currently, the Roubles are supported by export-focused companies that are required to convert their foreign currency income after the penalty froze half of Russia’s gold and forex reserves.
By the end of the year, the exchange rate may start to stabilise nearer to the 60-65 level, as imports recover and restrictions are potentially lifted.
Russia’s top bank Otkritie Bank observer said the rouble may firm to 55 to the dollar within a month before weakening to 70-80 by year-end.
Russian demands foreign buyers to pay in Roubles for gas which has also contributed to the rouble’s recent rally, the observer added.
Did the central bank interfere?
According to the Russian business newspaper reports, the bank had started purchasing foreign currency, in order to stop the rouble’s uncontrolled strengthening.
But the Central bank denied the reports and said, ‘this information does not correspond to reality’.
If the central bank were carrying out such interventions, the effect on the rouble rate would be more noticeable, says the Promsvyazbank observer.
‘Nevertheless, such news could influence the behaviour of market participants and provoke a weakening of the rouble.’