Friday saw the Russian rouble at its firmest. Some analysts predict that the rouble’s recent rise is due to EU nations getting ready to pay for gas and capital retaliation measures implemented by Moscow.
Half of Gazprom’s 54 customers have opened accounts with the company, and many European companies are paying 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.
As per Yuri Popov, a strategist at SberCIB Investment Research, a hub of Russia’s No. 1 lender Sberbank, 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.
This morning, the rouble has been on a tear, registering its strongest level since June of last year at 61.10 – 5% higher – against the euro in volatile trade after reaching 59.02.
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 skyrocketed about 30% to the dollar this year, even with a full-fledged economic decline in Russia. It became one of the best performing currencies but was unnaturally backed by retaliation implemented in late February to protect its financial state following its attack on Ukraine.
“Exporters are forced to sell (foreign currency), and there is no one to buy it,” said a trader at an investment firm in Moscow.
The current arrangements for end-of-the-month taxes due next week also have bullish rouble conditions, while demand for dollar and euro continue to stay low because of import chains being cut off as well as a ban on pulling out foreign currency from bank accounts 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.