Russian Rouble Hits 7-Year high VS Euro

The rouble’s recent jump is a sign that Russia may be putting up some barriers on capital flows. These measures, in addition to strong oil prices and an upcoming month-end tax period, have helped the currency strengthen against Europe’s common currency by about 6%.

Rouble gained 6.3% to trade at 58.75 versus the euro late last week.

Russia’s Rouble has been strengthening against the dollar this year, despite an economic crisis in Russia. The recovery is due to artificial support caused by controls imposed on February 26th which shield their financial sector from more Western sanctions. Th response from the west to Russia for sending troops into Ukraine and causing widespread alarm throughout Europe among other things.

The recovery of the Rouble is also being driven by export-focused companies that must convert their foreign currency revenue after nearly half was frozen in sanctions. While authorities leave restrictions intact, one analyst said the Rouble could further strengthen over time due to this new legislation’s effect on exports and imports alike.

“There are reports that restrictions could be lifted soon.” These statement was made by an Otkritie Bank analysts who predicted an increase in imports as well as increased stability within Russia.

The recent rise in the value of Russia’s currency, the rouble has also been largely due to the demand that foreign buyers pay for gas with the rouble. High oil prices and a month-end tax period usually prompt companies who deal primarily within Russian borders to make sure they convert all forex revenues into local currencies before a specific period of time run out or face penalties. The Central Bank of Russia has started buying foreign currency in order to stop the rouble’s uncontrolled strengthening, according to reports from earlier this week. The bank denied these claims when they were asked about it by media outlets but analysts say if true then such interventions would have more noticeable effects on rates for certain currencies like USD or EUR.

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