The ruble cemented its unlikely status as the world’s best-performing currency, hitting new multi-year highs this week. Since its collapse in the weeks following Russia’s invasion of Ukraine, which triggered sweeping international sanctions aimed at crippling the Russian economy, the ruble has come back strong.
On Tuesday, it traded at its highest level against the U.S. dollar since June 2015. It has gained around 35% so far this year, beating all major currencies, and more than doubled from its post low. -invasion.
Although the Russian economy has held up better than expected, the outlook is bleak, with double-digit inflation and most economists predicting a deep recession. But capital controls imposed by its central bank, including those that required exporters to exchange part of their income into rubles, have increased demand for Russian currency.
Higher revenues from oil and gas exports, which surged as prices rose and demand in Asia offset reductions in Europe, kept the ruble high. At the same time, Russian imports have fallen sharply, partly due to the withdrawal of many foreign companies from Russia, which also support the ruble.
In late February, after the invasion, the ruble crashed to its lowest level against the dollar, and Russia’s central bank more than doubled interest rates, to 20%, as part of its measures aimed at stopping the outflow of rubles from the economy. Since then, some restrictions have been relaxed and rates have been reduced to 9.5%, where they were set before the invasion. But the ruble continues to appreciate, which helps to assuage inflation but also puts pressure on the Russian budget, which relies on often dollar-denominated energy sales.