The price of the Russian currency has almost returned to the level before the invasion of Ukraine. Are the sanctions ineffective? Experts agree: it is more the result of supporting the currency with administrative measures and the collapse of imports.
One dollar was worth 81 rubles on Thursday morning, which is about 3 rubles more than on February 23 2022, the day before the Russian invasion of Ukraine began. On March 7, its price soared to 172. The Russian currency was thus recovering from the war and sanctions swiftly. But can this trend continue in the coming months?
Some analysts point out that the ruble strengthened thanks to hopes related to Ukrainian-Russian truce negotiations. However, Russian analysts name the main reason quite clearly: Russia is still selling its oil and gas on international markets. While these exports have fallen significantly in recent weeks, at the same time, imports have collapsed due to sanctions. This has resulted in an improvement in Russia's trade balance.
"We expect this trend to continue in April. Thus, the average dollar exchange rate may be 70-75 rubles," forecasts Yegor Zhilnikov, an analyst at Promvyazbank.
The strengthening of the ruble is also largely due to restrictions imposed by the Bank of Russia and the government. The central bank has banned commercial banks from selling foreign currency to customers for six months. It also restricted the transfer of funds from foreign currency deposits, and Russian companies were forced to exchange 80 per cent of revenues generated in foreign currencies for rubles. Citizens of the federation can receive interest on their foreign currency deposits only in roubles. Moreover, Putin announced that "unfriendly" countries would have to pay for Russian oil and gas in roubles. To this, the G7 countries have not agreed unanimously and openly.
Even though the ruble has strengthened a lot, it does not mean that sanctions will not affect the Russian economy. The country is still facing the threat of a significant recession this year, and sanctions could hit Russia's long-term growth prospects.
Categories: World, Business
Tags: Russia, War in Ukraine, Rouble
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