Strengthening of the ruble may continue

Expert opinion on what drives the strengthening of the ruble.

Strengthening of the ruble may continue

On May 15 Bloomberg called the Russian ruble the world's top-performing currency, referring to its 11% exchange rate growth against the dollar since the start of 2022. Managing partner of Wolfline Capital Nikita Dolgiy shared his view on the subject with a Russian nationwide online news service REGNUM News Agency:

"The dynamic strengthening of the ruble was the result of tightened restrictions on the international capital flows in and out of Russia in response to large-scale sanctions imposed by the West on Russia. The requirement for Russian exporters to sell 80% of foreign exchange earnings, limits on exchange currency purchases, as well as a sharp reduction in the flow of imported goods to Russia along with a ban on selling of Russian securities by foreign investors, - all these factors played in favor of such a dynamic growth of the ruble.

However, these conditions are long on the ruble exchange only inside Russia. If all of the above restrictions were lifted, it is unlikely that the ruble would be able to withstand the fall in the open currency exchange when exposed to such fundamental rate-setting factors as the real demand for the currency on the world market as a reserve currency and instrument of payment.

Nevertheless, it is noteworthy that more than ten European companies have already met Gazprom's requirements to pay for gas in rubles, and this indicates that the demand for the ruble from world markets may rise,” the expert believes.

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