Right after Russia‘s Military Operation in Ukraine, massive international sanctions were imposed against the country, causing the Russian Ruble to experience a major plunge. Although Russia faces tough trading restrictions and a serious military struggle in present times. The Russian ruble has taken off to an impressive rebound and back to its worth before the conflict took place. With a 40% leap against the dollar, the Russian Ruble is now the world’s strongest currency. Read along to learn about why the Ruble is so strong right now.
Why The Russian Ruble Regained Its Value
In general, when economic embargo is imposed against a nation, capitalists would withdraw and citizens are be tempted to convert their monies to other currencies. This results in a decline of the monetary unit’s value. Russia’s case is completely another story. What cushioned Russia’s economy from these trading barricades?
The country’s forceful measures to keep the money in the country have pushed the ruble up. With businesses fleeing the country and with sanctions in place, imports have dramatically plummeted. The drop has led to a rise of Russia’s surplus. This is because of its sky-high commodity prices, especially oil and natural gas prices. High commodity prices is enough to indemnify the drop in export volume impacted by international bans and embargoes.
Other Factors that Made the Ruble Strong
Another reason for a strong Russian Ruble is the requirement that foreign traders must pay for the energy they obtain in Rubles. A demand to convert half of their excess profits into rubles has also increased the demand for and the value of the currency. With the conversion requirement, it will also be hard for foreign investors to let go of their Russian expenditures.
Furthermore, the Central Bank of Russia has enforced rigid control measures on capital. They make converting the ruble into other currencies seem next to impossible.