Ruble Reaches 7-year Peak Against the Dollar

On Tuesday, the ruble reached a high of more than seven years against the US dollar, as month-end taxes and capital controls were able to offset the negative impacts of statements from the West about the country defaulting on its international bond payments. This has not happened in more than a century.

Ruble climbs

According to Moody’s credit agency and the White House, Russia has become a defaulter, as the country has been cut off from the global financial system because of the sanctions imposed against it. However, the claims have been rejected by the Kremlin, as it states that they have the money to make the payments thanks to their gas and oil revenues. Instead, they have accused Western countries of trying to drive the country into artificial default.


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The ruble climbed 0.9% at 1009 GMT against the US dollar and was trading at a value of 52.93. This was after it had recorded its strongest value against the greenback on the Moscow exchange in June 2015. The ruble had also climbed against the euro by 0.8% and was trading at much stronger levels than the currency had been before it decided to send its troops into Ukraine back on February 24th.

Back then, the ruble had been in free-float mode, so it was trading near 90 and near 80 to the euro and dollar, respectively. That was when the country did not have any capital controls in place and was hammered by the risks of sanctions.

Upside could be limited

However, there is a good chance that the upside in the Russian ruble could stay limited, as concerns about a strong ruble are rising. This is because it could take its toll on the country’s revenues generated from selling commodities for foreign currency abroad.

According to market participants, the current levels are good for those who want to buy hard currency, particularly considering the comments of Russian officials that the currency has become too strong. It has become the world’s best-performing currency this year due to the capital controls that Moscow had implemented which allowed it to shrug off the debt problems.

Russian securities are unlikely to suffer from any lasting consequences because of the default because they had been priced in by Eurobonds quite a long time ago. As far as Russia itself is concerned, it does not have access to the external debt market, so it is unlikely to make any difference for the country.

Market performance

The Russian currency may receive some support in the short term this week because it is the peak of the tax period. Therefore, it means that export companies will be converting their euro and dollar revenue into rubles, thereby increasing demand for the currency.

As far as the stock market is concerned, there was a 0.1% decline in the RTS index, which is denominated in the dollar, as it reached 1,427.2 points. Meanwhile, a 0.9% decline was recorded in the MOEX Russian index, which is based on rubles, and was down to 2,396.1 points.


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