Despite the European Commission’s proposed oil ban, the Russian ruble has shown extraordinary resilience, rising over 10% against the dollar and euro within a week.
The Russian ruble soared to a two-year high against the dollar and the euro today. Despite decreasing interest rates twice in a short period, the ruble has maintained its upward momentum.
At the time of writing, the ruble was trading at 65 against the dollar, indicative of an 11.34% gain within 5 trading days. The rubles also made significant gains against the Euro, trading at 68. This is indicative of an 11.11% gain within 5 trading days.
What you should know
The European Commission proposed this week a comprehensive embargo on Russian oil imports into the EU. Three big Russian banks would be cut off from the SWIFT international banking payment system as part of the new sanctions.
The measures, which will require the consent of all 27 EU member states, are the most recent in a series of western sanctions aimed at reducing the Kremlin’s ability to wage war on Ukraine by focusing on the Russian economy’s pillars.
Despite rising sanctions aimed at crippling Russia’s economy, energy exports have been a vital source of money. Before the planned restriction, Russia was on track to earn over $321 billion from energy exports this year, up more than a third from the previous year, based on Bloomberg.
Due to high energy prices, Russia expects $9.6 billion more in energy sales in April than it had anticipated. The EU oil embargo, if it is passed, would result in a loss of part of Russia’s anticipated revenue for future transactions and a slowdown in currency demand.
The Russian ruble has witnessed significant gains against the US dollar in the last month. At the time of writing, the ruble was up 22.29% against the dollar and 25.37% against the euros
Market participants are questioning if the current rate is sustainable in light of the restrictions. However, the ruble has shown resilience after making a remarkable comeback from its record low in early March, when Western nations imposed unprecedented sanctions on Moscow and its financial system.
