Ruble Strengthens: Russia’s Central Bank Pushes Dollar to 76.04

The official US dollar exchange rate in Russia fell sharply as the Central Bank of the Russian Federation lowered it by almost one and a half rubles to 76.04, according to data released by the regulator.

Dollar Weakens as Ruble Gains Momentum

Just a day earlier, on January 21, the Central Bank cut the rate to 77.52 rubles, the lowest level since the beginning of the year. On Thursday, the weakening of the American currency continued, and on the Forex market the dollar dropped below 75 rubles.

"Tax season, which temporarily increases the supply of foreign currency, along with the traditionally weak demand for it at the start of the year, are two powerful drivers behind the strengthening of the ruble,” said Dmitry Babin, an analyst at BKS Express.

Euro Also Continues to Decline

The euro followed the same downward trend on January 22. After the Central Bank reduced the rate to 90.72 rubles the previous day, it adjusted the euro further down to 88.79 rubles.

After a relatively stable January, a “volatile” February is expected to follow. It is in the final month of winter that the ruble’s positions could weaken significantly. If oil prices decline and import volumes recover, the trade balance may become less favorable for the Russian currency.

In addition, the ruble’s future will be strongly influenced by the next meeting of the Bank of Russia’s board of directors, scheduled for February 13. Since inflation stood at 5.59% last year, the regulator may opt for a further cut to the key interest rate, which in turn could trigger another phase of ruble depreciation.