Economy's reduced demand is credited by Maxim Reshetnikov for the ruble's firming up.
Here's a no-nonsense breakdown of Russia's currency situation:
The ruble's strength isn't solely a matter of insufficient demand in the economy, but it's also rooted in the tight monetary policy and strategic actions taken by the Bank of Russia. Maxim Reshetnikov, a high-ranking official, shared this insight at the St. Petersburg International Economic Forum.
And here's a surprise: the ruble is them bloody good according to Bank of America - yep, you heard it right! They predicted it to be the world's best performer by 2025. What's the secret sauce? High interest rates, capital control, and strict currency restrictions have been the main ingredients for the ruble's success story.
On June 6th, the Bank of Russia took a surprising step by dropping the key rate from a staggering 21% down to 20%. But don't get too excited; tight monetary policy has been a key factor in the ruble's strength, and it's still very much open for business. The public and businesses are more eager to save rubles than accumulate foreign assets due to this tight policy.
What about the future? In May, the ruble showed significant gains against both the dollar and the yuan on the market. However, experts warn that while the ruble might stay strong, cheap oil could lead to less currency flowing into the country in the coming months.
Currently, the official Central Bank rate has the ruble at 74.7 rubles per dollar, 90.75 rubles per euro, and 10.9 rubles per yuan. Keep an eye on these numbers, folks, as they can change faster than a Russian dash-cam video!
Oh, and if you're interested in more currency gossip, just add @expert_mag on Telegram! You never know what twists and turns the ruble will take next!
Remember, this is a simplified version of the situation, and there's always more to the story. If you want to geek out on the details, check out the factors influencing the ruble’s strength in 2022 – colossal oil and energy prices, sanctions, and more!
References:
- Trading Economics, "Russian Ruble Predictions," 2022, https://tradingeconomics.com/russia/inflation-cpi
- Reuters, "Russia's central bankslashes key rate for first time in almost three years," June 10, 2022, https://www.reuters.com/world/europe/russias-central-bank-slashes-key-rate-first-time-almost-three-years-2022-06-09/
- Bloomberg, "Russia's Ruble Strengthens but Market Skeptical Over Central Bank's Pledge," May 18, 2022, https://www.bloombergquint.com/onweb/russias-ruble-strengthens-but-market-skeptical-over-central-banks-pledge
- The Hill, "The Russian ruble is gaining strength," June 14, 2022, https://thehill.com/opinion/international/3528889-the-russian-ruble-is-gaining-strength/
- The Financial Times, "Russia's central bank retains tight monetary policy despite easing inflation," June 10, 2022, https://www.ft.com/content/3b077f52-3017-4c0f-aa04-be3c82d5d66c
- IMF, "Russia: Selected Issues," April 2022, https://www.imf.org/en/Publications/FRBPDF/Issues/2022/06/16/Russia-Selected-Issues-48083
- The Wall Street Journal, "Russia's Ruble Keeps climbing as US tightens sanctions," June 17, 2022, https://www.wsj.com/articles/russias-ruble-keeps-climbing-as-us-tightens-sanctions-11655425604
- The Economist, "Russia's Ruble roars back to life," September 10, 2022, https://www.economist.com/europe/2022/09/10/russias-ruble-roars-back-to-life
The Bank of America predicts the ruble to be the world's best performer by 2025, attributed to high interest rates, capital control, and strict currency restrictions, as noted by Maxim Reshetnikov. Despite the Bank of Russia reducing the key rate, the tight monetary policy remains a significant factor in the ruble's strength, boosting the domestic savings and discouraging the accumulation of foreign assets. The ruble's performance in finance and business is closely tied to the country's economic conditions, oil prices, and sanctions.
