The Russian ruble recorded its best level in months in the last week’s trading, supported by the large jumps in natural gas prices.
The recovery of the Russian ruble coincides with the decline in the dollar exchange rate, during the trading of the Moscow Stock Exchange, to below 72 rubles to the dollar for the first time since last June.
Oil and gas exports are reaping gains in light of the rising demand around the world and the crisis in European markets.
The week ended very positively for the ruble, this situation is primarily due to external factors and the de-escalation of risks following Russia’s decision to increase gas supplies to Europe, said Mark Guichmann, chief analyst at Tele Trade in Moscow.
He added that the previous decision reduces the risks of a frightening crisis in the energy field and accelerating the pace of inflation around the world due to the rise in fuel prices.
After gas prices jumped in the European market to about two thousand dollars per thousand cubic meters, and the subsequent drop to $1,100.
Russia issued signs to calm the market situation, as Russian President Vladimir Putin held a meeting last Wednesday to discuss the strategy of work in the energy field, which touched on how to help overcome the energy crisis in Europe.
Putin called on the Russian gas giant, Gazprom, to fulfill its contractual obligations and not to reduce the transit of Russian gas through Ukrainian territory.
On the non-oil factors that strengthen the ruble, Goikhman explained: “The market is waiting for the Russian Central Bank to raise the basic interest rate again this October, which will increase the demand for assets listed in the ruble and the Russian currency itself.”
With the pace of inflation increasing in Russia and rising to about 7.5% on an annual basis, which is the highest level in five years, the Central Bank hinted at the possibility of continuing to raise the basic interest rate to return the inflation rate to the target level of 4%.
Since March, the Central Bank has started gradually raising the basic interest rate, to reach 6.75% currently, compared to 4.25% at the beginning of the year.
He attributed his decisions to the growing risks of inflation after the recovery of economic activity from the Corona pandemic in particular.