Russian ruble firms hit 7-year high after 53 against dollar in Moscow trade

Coins of one Russian ruble and one euro are seen in this illustration taken April 6, 2022. REUTERS

MOSCOW, June 22 (Reuters) – The ruble hit its highest level in seven years against the dollar and the euro on Wednesday, buoyed by capital controls, a favorable upcoming fiscal period and Russia’s trade surplus .

At 07:34 GMT, the ruble was 1.4% stronger against the dollar at 53.07, strengthening earlier to 52.80, its strongest mark since June 2015.

It had gained 1.6% to trade at 55.36 against the euro, its strongest point since May 2015.

The rouble, which became the the best performing currency in the world this year, is driven by Russia’s high revenue from commodity exports, a sharp drop in imports and a ban on households withdrawing their foreign currency savings.

Top policymakers used Russia’s annual economic forum in St. Petersburg last week to highlight the ruble’s recent strength. It is feared that it will weigh on the economy as it tumbles into recession amid tough sanctions against what Moscow calls a “special military operation” in Ukraine.

The ruble is also supported by companies due to pay taxes early next week. For export-oriented companies, this means converting income from dollars and euros into rubles.

“Factors such as a strong trade balance and the fiscal period are currently working in favor of the ruble,” Otkritie Research said. “That is to say, there is no reason for the ruble to weaken.”

Russian stock indices were mixed, held back in part by oil prices, which fell sharply to a low in more than a month.

Brent crude oil, a global benchmark for Russia’s top export, fell 4.4% to $109.6 a barrel.

Promsvyazbank also said the ruble’s strength was hampering the growth of commodity companies, putting pressure on the overall stock market.

The dollar-denominated RTS index (.IRTS) rose 0.8% to 1,390.4 points, hitting a four-month high earlier, but Russia’s rouble-based MOEX index (.IMOEX) was down. down 0.5% to 2,347.6 points.

Reuters Editing reporting by Tomasz Janowski

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