<mediadc-video-embed data-state="{"cms.site.owner":{"_ref":"00000161-3486-d333-a9e9-76c6fbf30000","_type":"00000161-3461-dd66-ab67-fd6b93390000"},"cms.content.publishDate":1655742203909,"cms.content.publishUser":{"_ref":"00000168-ed7d-d9d9-a9ec-ff7daffb0002","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"cms.content.updateDate":1655742203909,"cms.content.updateUser":{"_ref":"00000168-ed7d-d9d9-a9ec-ff7daffb0002","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"rawHtml":"
var _bp = _bp||[]; _bp.push({ "div": "Brid_55742063", "obj": {"id":"27789","width":"16","height":"9","video":"1035022"} }); ","_id":"00000181-81ec-d789-a3f7-99eefc9c0000","_type":"2f5a8339-a89a-3738-9cd2-3ddf0c8da574"}”>Video Embed
The value of Russia’s currency relative to the dollar is now at the highest level in seven years despite the United States and Europe levying sanctions against Moscow.
The ruble is up a whopping 35% this year against the U.S. dollar and is trading at 55.78 to the dollar. That comes after the value of the ruble cratered following Russia’s invasion of Ukraine and was at one point worth less than a penny.
After Russia invaded Ukraine in February, the U.S. and European Union responded quickly with economic sanctions designed to crush the value of the ruble and send inflation soaring, a tactic similar to U.S. policy in Iran. The West had hoped the pressure would be enough to push Russian strongman Vladimir Putin to back out of the war, but the ruble has proved buoyant, and Putin has proven resistant.
The ruble is now the best performer against the greenback since the start of the year, despite Russian economic growth moving in the opposite direction.
ZELENSKY: ‘EXPECT GREATER HOSTILE ACTIVITY’ AS UKRAINE AWAITS EU MEMBERSHIP DECISION
After the invasion, Russia’s central bank imposed strict capital controls to force buying of the ruble and limit selling, including requiring Russian exporters to convert a percentage of their excess revenues into rubles.
Another factor pushing up the value of the ruble is soaring global energy prices. Since the war began, oil and gas prices have exploded as outflows from Russia have slowed.
Brent crude, the global oil benchmark, was at $114 a barrel on Monday morning, while the U.S. benchmark, West Texas Intermediate is now at $110 — a big increase from the $75 it was at the start of the year.
Russia has forced some foreign purchasers of its energy products to pay in rubles, something that has helped bolster the currency’s strength globally. Moscow is now seeing its revenue from energy exports pushing $20 billion per month, even as European importers work to cut dependence on Russian oil and gas, according to CBS News.
“Commodity prices are currently sky-high, and even though there is a drop in the volume of Russian exports due to embargoes and sanctioning, the increase in commodity prices more than compensates for these drops,” said Tatiana Orlova, lead emerging markets economist at Oxford Economics.
The ruble is so strong, in fact, that Russian officials are now trying to weaken it. First Deputy Prime Minister Andrey Belousov said there have been discussions about targeting an “optimal” exchange rate of 70-80 rubles per dollar in order to encourage economic growth, Bloomberg reported.
Russia has also worked to weaken the capital controls it implemented after the U.S. and Europe hit its economy with sanctions. The Russian central bank quickly hiked interest rates from 9.5% to 20% in the immediate aftermath of the invasion, but since then, it has slashed rates, which are now back at pre-war levels.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
“Russia’s central bank is trying to loosen capital controls because it feels the ruble is too strong,” Elina Ribakova, deputy chief economist at the Institute of International Finance, said late last month. “But the central bank is in a rough spot. If they continue loosening, they may open the floodgates of capital flows out of the country. In previous crises, $200 billion left the country in a matter of months.”
Meanwhile, despite the sanctions and international condemnation, Russia continues to wage war in Europe. The number of civilian casualties in Ukraine since Russia invaded has surpassed 10,000, according to a recent update from the United Nations, although it believes the number is significantly higher.
