The ruble hit the highest price against the euro in five years

Reuters – The Russian ruble held above 64 against the dollar on Monday, jumped briefly to 62.71 per dollar, and rose to its highest levels in nearly five years against the euro, buoyed by continued restrictions on foreign exchange trade.

The ruble is the world’s best performing currency so far this year, although this is due to artificial support for capital controls that Russia imposed to protect its financial sector in late February after tens of thousands of troops were deployed to Ukraine.

Alexander Dzheauev, an analyst at Alpha Capital, said that the situation in the local currency market has remained the same for several weeks, and the ruble remains strong with the supply of foreign currency outstripping the demand.

Central bank data showed on Monday that Russia’s current account surplus more than tripled from January to April to $95.8 billion, driven by higher import revenues and lower imports.

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“It seems that the break-even point has not been found yet,” Djeuev said of the ruble’s rate.

It was not clear whether President Vladimir Putin’s demand for gas payments in rubles also supported the currency’s appreciation.

“Current capital control measures have brought the ruble back to pre-pandemic levels,” Rosbank analysts said in a note, and predicted that the ruble would fall to 90 against the dollar by the end of the year.

“In the near future, a new FX market regulator may adjust these restrictions, but until then, the USD/RUB consolidation may be at the lower end of the 63.0-70.0 range.”

Against the euro, the ruble rose 1.6% to 66.05, approaching its strongest level since June 2017 at 64.9425, which touched the Moscow Stock Exchange on Friday.

Attention is focused on the confrontation between Moscow and the West and fears of a new package of sanctions to punish Russia for what it calls a “special military operation” in Ukraine. But its impact is mitigated by the requirement that export-focused firms convert into foreign currencies and other restrictions.

“The confirmation of the ruble today may be moderate, but the dollar rate may gradually fall to 62,” analysts at Promsvyazbank said in a note.

Russian stock indices rose further.

The dollar-denominated RTS index rose 3% to 1,165.7 points. Russia’s ruble-based MOEX index rose 2% to 2,354.1 points.

Promsvyazbank said the MOEX index could have entered the 2400-2500 range this week.

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