On Monday, the Russian ruble was once more past the 61 levels against the US dollar, after recent sessions had seen some volatile swings in the currency. The market was waiting on interventions in the currency.
In late June, the Russian currency managed to reach a high of more than seven years against the US dollar, but it has fallen by 18% since then. A number of Russian officials had expressed their concerns about the strengthening of the currency, which resulted in a sharp decline.
A strong ruble is not always good because it dents the country’s income from exporting commodities and other items that are priced in euros and dollars. The ruble had fallen by 0.3% against the dollar at 0735 GMT to reach 61.12 and there was a 0.9% gain in the currency, which brought it to 61.82 against the euro.
Currency analysts said that it was likely for the ruble to continue rising gently and ignore all the market negativity.
This year has seen the Russian ruble become the best-performing currency so far, thanks to measures taken by the government for protecting the financial system of the country. This was after Western nations had imposed sanctions because of the conflict with Ukraine. Some of these measures include not allowing households in the country to withdraw their foreign currency savings.
A sharp fall in imports and soaring prices of commodities have also given the Russian ruble a lot of support. According to analysts, it would not make much of a difference to the budget whether the dollar is at 50 or 60 against the US dollar. This is because officials prefer it to be between 70 and 80. Analysts also said that they may see the ruble reach 55 against the greenback ahead of quarterly dividend payments and taxes.
They also added that it was highly doubtful for imports to recover enough and exports to fall short enough in July to have a big impact on the Russian ruble.
The stock indexes in Russia recorded declines on Monday. There was a 0.8% decline in the RTS index, which is dollar-denominated, as it reached 1,136.2 points. The MOEX Russian index based on the ruble was also down by 0.8% to reach 2,205.8 points.
The Central Bank of Russia (CBR) will also be meeting soon for deciding the interest rate in the country. There have been talks about a risk of deflation, as the consumer prices in the country are declining and there is also a slowdown in inflation. Numbers show that the inflation was 17.1% in May, but had come down to 15.9%.
However, the Deputy Governor of the Russian central bank, Alexei Zabotkin said that inflationary expectations had increased in the last couple of months, so it was not appropriate to talk about deflation. The board is scheduled for a meeting on July 22nd where the rate is expected to be reduced from its current level of 9.5%.