28.11.202516:04:13UTC+00Russian Ruble Strengthens to 2-Year High

The Russian ruble has appreciated beyond 77.5 per USD, nearing its highest point in over two years. This strengthening is largely due to the recent asset repatriations by export-driven industries, which have intensified the effects of stringent capital controls and elevated interest rates. In response to sanctions imposed by the US on Lukoil and Rosneft—Russia’s two largest oil firms and exporters—these entities have moved reserves back into ruble-denominated domestic accounts to guard against potential asset freezes by Western governments. This action follows the Kremlin’s directive for export-focused companies to convert 40% of their foreign exchange revenues into rubles. Additionally, the Bank of Russia indicated its intention to maintain a restrictive policy until the end of the next year, aiming to suppress inflationary pressures, despite its recent unexpected 50 basis points rate cut. Given the enduring impact of Western sanctions, government spending that heavily emphasizes the conflict in Ukraine, and elevated borrowing costs, the IMF projects that Russia’s GDP will only register a 0.6% growth this year.