Russian ruble continues rising in value against all odds

The Russian ruble continues rising in value dramatically. Contrary to all pessimistic predictions, the Russian ruble has been rising against both the dollar and the value for weeks now. On May 20, the dollar exchange rate fell below the mark of 58 rubles for the first time since 2018.

The euro also fell to multi-year lows — to 59.58 rubles per one euro. As of 11:15 a. m., the dollar corrected to 58.06 rubles, and the euro rose to 60.24 rubles.

Since the beginning of the trading session on the Moscow Exchange, the dollar and the euro have lost 5 and 4.5 rubles respectively. The trend for the Russian currency to strengthen is primarily due to administrative restrictions that the Bank of Russia imposed after the start of the Russian operation in Ukraine. A record trade surplus also contributes to the strengthening of the Russian currency.

Russia's exports have remained on more or less the same levels, while imports have dropped dramatically after the imposition of most stringent economic sanctions against Russia in connection with its actions in Ukraine. Coupled with an obligation for exporters to sell their foreign exchange earnings, the demand for dollars and euros in Russia has collapsed.

At the same time, the strengthening of the Russian ruble poses a threat to the Russian budget. The level at which the national currency is currently traded can already be referred to as critical, experts say.

The Central Bank is making attempts to ease the pressure on the ruble:

• the monthly threshold for wiring foreign currency abroad has been increased from $10,000 to $50,000;
• the free sale of foreign currency has been allowed (save for dollars and euros).

However, these measures have not led to the desired result yet.