Why does the Russian ruble appreciate amid so many sanctions? By Investing.com

By Kasia Plewa of Investing.com Poland

Investing.com – The is heading for a third straight week of appreciation against the dollar. Despite the Russian currency depreciating 0.7% to 83.78 rubles per dollar, the week is heading for a 12.74% appreciation, coming close to the level negotiated before the start of Russia’s invasion of Ukraine.

Before the start of the war, one dollar cost about 80 rubles. After the start of the conflict, the ruble had lost a lot, almost 50%! Its value, at some point, was higher than the level of 150 rubles.

Since March 7, the ruble has been steadily gaining, as the chart below shows:

According to Reuters, the dynamics driving the ruble have been artificial to some extent recently . Russian authorities control the transfer of capital, limit the possibilities to buy foreign currencies, foreign investors have not been able to sell Russian shares for a long time, and “ordinary citizens” have limited space to exchange the ruble for foreign currency.

Meanwhile, the Central Bank of Russia raised the rate to 20%. In practice, the ruble is no longer a fully liquid currency whose rate is determined by supply and demand.

Some, in turn, speak of the ineffectiveness of Western sanctions. The market has focused on what Moscow’s demand that its gas exports be paid for in rubles will mean, which is to force demand for the Russian currency.

Purchases from and Russians by European countries are being scrutinized as a loophole and salvation for the Russian economy. Russian oil and gas exports to Europe, China and India continue. Germany is developing an emergency plan .

The Polish government reacts uncompromisingly to this matter. During Wednesday’s press conference, Prime Minister Mateusz Morawiecki, PKN President Orlen (WA: PKN ) Daniel Obajtek and Climate and Environment Minister Anna Moskwa announced the relinquishment of the supply of oil, gas and Russian by the end of this year.

“The United States has already banned Russian imports of oil and natural gas, and Britain will withdraw them by the end of this year. However, these decisions will not have a significant impact unless and until the European Union follows in their footsteps.,” wrote Benjamin Hilgenstock and Elina Ribakova, economists at the Institute of International Finance, in a report released Wednesday.

Russian stocks are also growing, while some restrictions on short selling have been lifted. The dollar-denominated index rose 3.6% to 983.5 points, the highest since Russia began its war with Ukraine on Feb. 24.

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