The ruble confirmed its unlikely status as the world’s best performing currency and soared to new multi-year highs this week. Since the collapse in the weeks following Russia’s invasion of Ukraine, which led to sweeping international sanctions to cripple the Russian economy, the ruble has been roaring again.
On Tuesday, it traded at its highest level against the US dollar since June 2015. It is up about 35 percent so far this year, beating every major currency, and has more than doubled since its post-invasion low.
While the Russian economy has held up better than many expected, the outlook is bleak, with double-digit inflation and most economists predicting a deep recession. But central bank-imposed capital controls, including those that forced exporters to exchange some of their earnings into rubles, have increased demand for the Russian currency.
Higher revenues from oil and gas exports, which have risen as prices rise and demand in Asia offsets austerity in Europe, has 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 all-time low against the dollar, and the Russian central bank more than doubled interest rates to 20 percent, as part of its measures to halt the outflow of rubles from the economy. Since then, some restrictions have been relaxed and rates have been lowered to 9.5 percent where they were set before the invasion. But the ruble continues to rise, helping to reduce inflation, but also putting pressure on Russia’s budget, which relies on energy sales, often denominated in dollars.
