(Reuters) – On Tuesday, the Russian rouble went up against the dollar to levels that hadn’t been seen since March 2018. This was helped by export-focused companies selling foreign currency to pay taxes and ignoring a small loosening of capital controls.
Even though Russia is in the middle of a full-scale economic crisis, the rouble has strengthened against the dollar by about 30% this year. This makes it the world’s.
Capital controls were put in place at the end of February to protect Russia’s financial sector after Moscow’s decision to send tens of thousands of troops into Ukraine led to new sanctions from the West. These controls affect the rouble.
At 7:25 GMT, the rouble was 0.7% stronger against the dollar, at 57.44, after reaching 56.61 for the first time in more than four years on the Moscow Exchange.
The rouble rose 0.9% against the euro to 59.57, which is close to a seven-year high.
Because of how strong the currency is, there are worries about how it will hurt Russia’s budget from exports. On Monday, Russia cut from 80% to 50% the amount of foreign currency earnings that exporters had to turn into roubles.
Even though capital controls have been slightly eased, the rouble could strengthen to 55 per dollar in the near future, said Dmitry Polevoy, head of investment at LockoInvest.
“Mid- and long-term investors could use current levels to open long positions in foreign currencies,” Polevoy said.
In a note, Sinara Investment Bank said that the rouble could go back to being worth between 60 and 65 dollars.
At banks, the rouble was worth less. The biggest bank in Russia, Sberbank, was willing to sell cash dollars and euros for 58.20 and 60.38 roubles each.
The RTS index in dollars dropped by 0.7% to 1,245.0 points. The rouble-based MOEX Russian index was 0.1 percent lower at 2,276.7 points.
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