The Russian ruble displayed resilience on Friday, as financial analysts assessed the implications of the recent sanctions imposed by the United States in response to the ongoing conflict in Ukraine. The ruble maintained its strong performance, trading near a three-month high, bolstered by foreign currency sales and rising interest rates. At 0755 GMT, the ruble registered a 0.3% increase against the US dollar, reaching 93.10, remaining close to its recent peak of 91.6225 achieved on Wednesday.
Simultaneously, the ruble also saw a 0.3% increase in value against the euro, settling at 99.06, and a 0.1% strengthening against the yuan, reaching 12.70. Despite the conclusion of the month-end tax payments that typically involve exporters converting foreign exchange earnings to meet domestic obligations earlier in the week, President Vladimir Putin’s decree mandating foreign exchange sales for select exporters continued to support the currency.
The ruble has been on an upward trajectory against the dollar since the announcement of this decree. Furthermore, the central bank’s unexpected decision to raise interest rates to 15% in late October has contributed to the ruble’s resilience. On Thursday, the United States imposed a comprehensive set of new sanctions against Russia, targeting its future energy capabilities, measures to evade sanctions, seven Russia-based banks, and numerous industrial enterprises.
The inclusion of additional banks in the sanctions narrows the avenues for international trade payments, potentially leading to a decrease in imports. It also makes it riskier for exporters to maintain foreign currency in overseas accounts, cautioned Dmitry Polevoy, head of investment at Locko-Invest. Polevoy suggested, “Sanctions could serve as a stabilizing factor for the ruble, aiding the central bank’s efforts to combat inflation.” However, he also cautioned that a significant strengthening of the ruble might impact budget revenues, which have become increasingly dependent on the exchange rate due to income from energy-related sources.
Brent crude oil, a key global benchmark and a mainstay of Russia’s exports, experienced a 0.4% increase, reaching $87.21 per barrel. Russian stock indexes reflected this positive sentiment, with the dollar-denominated RTS index rising by 0.3% to 1,083.4 points and the ruble-based MOEX Russian index seeing a 0.2% increase, reaching 3,202.0 points.