Ruble stabilizes after latest sanctions slump

The ruble has recovered from a sudden devaluation last month, which was largely tied to liquidity problems in the wake of US sanctions against dozens of Russian banks — chiefly Gazprombank. The value of the currency against both the dollar and the yuan, on various measures, had reached its worst level since March 2022.

• The ruble routinely traded close to the psychologically important mark of 100 against the dollar on the interbank markets throughout the first few weeks of November. But it plunged into a fresh crisis after November 21, when the US imposed sanctions on state lender Gazprombank, which handles all international payments for Russian gas. The ruble was trading at 113 rubles against the dollar and 119 against the euro in the interbank market days after that decision. On the Moscow Exchange (where dollars and euros are no longer traded), the Chinese yuan hit 15 rubles. You can read more about the currency crisis here.
• By the end of last week, the ruble had recovered, with the dollar rate climbing back above the symbolic 100-mark. The official exchange rate, which the central bank sets based on market trading patterns, was set at 99.4 rubles over the weekend. The rate for the euro, also based on interbank trading, was set at 106.3 rubles and the yuan was trading at 13.5 rubles.
• The ruble’s support came from people taking advantage of the fall to replenish their supply of Russian currency for the months ahead, as well as a reduction in speculative operations, Russian experts believe. This was aided by the Central Bank’s decision to suspend some foreign currency purchases until the end of the year (usually it sells rubles to replenish the National Welfare Fund, Russia’s piggy bank of excess oil and gas profits). Market players expect that new mechanisms to pay for exports will be found, and Vladimir Putin recently cancelled the requirement for foreign buyers to direct all payments for Russian gas through Gazprombank.

Why the world should care

The increased volatility of the ruble has certainly become a problem in the Russian economy due to sanctions and the disbalances they create. But it is too early to bury the Russian currency — Moscow’s economic authorities have sufficient tools to stabilize and support the ruble.