Despite Russia’s move to relax some capital controls and prospects of an interest rate cut at a forthcoming central bank meeting, the Russian rouble has maintained its bullish trend.
So far this year, the rouble has become one of the best-performing currencies in the world, boosted artificially by capital controls and supported by high oil prices, Russia’s main exports.
At the time of writing, the rouble was 1.40% stronger against the dollar at 60.14 roubles. This is indicative of a 19.55% increase YTD and a 7.35% increase in one month. It firmed more than 1.5% to 65.05 against the euro.
What you should know
- Russia’s central bank slashed interest rates to 11% for the third time in less than a month, boosted by lower inflationary pressures due to the success of the Russian ruble. According to the bank, funds continue to flow into fixed-term ruble deposits while lending activity remains subdued. This reduces pro-inflationary risks and necessitates monetary easing.
- Yesterday, the central bank raised the ceiling for cross-border transactions for individuals, saying Russian residents and non-residents from “friendly” states would be able to channel abroad the equivalent of up to $150,000 a month, up from the previous limit of $50,000.All the non-residents are still able to send foreign currency abroad to the value of their salaries, the bank said.
- The trade balance continues to affect the rouble rate, with exports being relatively high while imports have fallen. Hence, the rouble is projected to appreciate as capital controls are eased further, especially as exporters ramp up their hard currency sales before the end of the month.