On Friday, the Russian rouble rebounded to its surging levels against the euro and dollar since June 2015 and March 2018, which analysts say is due to EU nations getting ready to pay Russia for gas and capital retaliations implemented by Moscow.
According to Russia on Thursday, half of the gas behemoth Gazprom’s 54 customers have opened Gazprombank accounts, with European firms entering close deadlines to pay for their gas supplies.
Opening those accounts is attainable following EU executives enabling member states to continue purchasing Russian gas without violating multiple sanctions they have jointly implemented against Russia for what Moscow describes as its “special military operation” in Ukraine that began on February 24.
One of the critical grounds for the rouble upturn is the shift to roubles from euros that will occur in European payments for Russian gas, according to Yuri Popov, a strategist at SberCIB Investment Research, a hub of Russia’s No. 1 lender Sberbank.
At 0807 GMT, the rouble had surged over 5% to 61.10 against the euro in volatile trade on the Moscow Exchange after reaching 59.02, its firmest since June 2015.
Meanwhile, against the dollar, it firmed over 4% on the day to 59.10 after touching 57.0750, a strong level not experienced since March 2018.
The rouble had soared about 30% to the dollar this year even with a full-fledged economic decline in Russia, becoming the best-performing currency, although unnaturally backed by retaliations implemented in late February to protect Russia’s financial state following its attack in Ukraine.
The rouble’s rise is partly attributed to export-focused firms responsible for converting their foreign currency profit since Western sanctions froze almost half of Russia’s gold and forex reserves.
“Exporters are forced to sell (foreign currency), and there is no one to buy it,” said a trader at an investment firm in Moscow.
Arrangements for end-of-the-month taxes due next week have also bolstered the roubles. On the other hand, dollar and euro demand continue to stay at low levels because of the severed import chains and bans on pulling out foreign currency from bank accounts and transferring it outside Russia.
“The key question is whether the central bank will step in as the excessive rouble firming is not in the finance ministry’s and budget plans,” said an analyst at CentroCreditBank, Evgeny Suvorov.
On Friday, the head of the central bank’s monetary policy department, Kirill Tremasov, said the rouble continues to be a free-floating currency, according to the RIA news network.
The central bank has not given any sentiment on the rouble rate.