The US Dollar to Ruble trades at 60.50 and is the best trading currency in 2022. Capital control measures and high crude prices have strengthened the Ruble.
The value of the Rusian currency at 60.50 in August is better than the pre-invasion level. High energy prices have contributed to the rise in Ruble value. Food prices saw a rebound higher with shortages arising from the war. Capital control measures have added strength to the Ruble, but experts predict it as an artificial rally.
The Russian Ruble was less volatile than other major currencies, fluctuating between the 60.40 and 61.90 levels last week.
Russian Ruble Gains from Capital Control Measures
The Ruble shows stability despite sanctions raised by various countries after the war on Ukraine. But experts predict economic stagnation soon in Russia. Demand has come down, and it has lowered inflation. The Bank of Russia has cut key rates by 150 basis points in its July meeting to 8.00% p.a.
The government is taking steps to prevent the flight of its currency by asking for payment in Rubles. The capital control measures taken by the government have strengthened the Ruble artificially. Russia depends on its crude exports, and the sanctions raised by other countries have lowered the demand for Russian gas and oil.
President Vladimir Putin has asked for payment in Rubles for its oil and gas exports as a capital control measure to protect the Ruble value. After the sanctions raised by the Western countries, Russia is selling its goods to buyers from Asia at discounted prices.
The Consumer price index in Russia was at 15.9% in June, lower than what it was before the conflict with Ukraine. However, experts warn that the lower inflation is an artificial situation, which will reverse in the next few months.
Consumer spending has come down in Russia as production decreased. Sanctions raised by the western countries in Russia have hit exports. There is a decline in business activity, much lower than the predictions by the Bank of Russia in June. The agricultural ministry states that grain exports from Ukraine fell 48.6% year on year. Food prices have gone up with the squeeze in Ukraine’s grain production.
Apart from the loss of many human lives, the war raging between Ukraine and Russia has affected the supply chain. Ukraine and Russia are the leading producers of food grain and crude oil. The war has affected the export of commodities, driving up prices of crude oil and food grains.
Russia continues its military operations in Ukraine. Rockets fired on the grounds of a Ukraine nuclear power plant have raised fresh problems, as nuclear safety norms are violated.
Major Currency Pairs in the Forex Market
Euro to US Dollar Currency Prices
The Euro region shows signs of slowing economic activity as the war drag on in Ukraine. High energy costs are slowing down the economic activities in the country while benefitting the Russian Ruble.
Russia exports almost 40% of its energy requirements to the EU. Germany and Italy are the largest importers of crude products from Russia. Inflation in the Eurozone hit 8.9% in July, higher than the 8.6% in June. The Euro slid to a 20-year low as the energy crisis haunts the European Union.
The continent will have to meet its energy shortage to protect its agricultural and manufacturing sectors having high energy requirements. Energy needs will rise during the cold winter months. Consumers are already facing the problem of high inflation, which is at 8.6%. Germany is the biggest importer of gas from Russia.
The dairy sector depends on energy to store the millions of liters of milk produced every day. Dairy farms have high energy requirements for storage and packaging purposes.
Western countries raised sanctions on Russia, opposing the Russian attack on Ukraine.
GBP to US Dollar Currency Prices
The UK gets only 4% of its gas requirements from Russia. Though it is not directly affected by the Russian gas restrictions, the rise in global crude prices has brought a surge in inflation in the UK.
Household energy bills were kept in check by the energy price cap. But bills rose to £2,000 when the cap was increased in April. Analysts expect bills to rise again in autumn when the energy price cap increases again.
Inflation in the UK is currently at 9.4%, with a spiraling cost of living. Energy bills are the chief cause of inflation, with petrol and diesel prices shooting high.
US Dollar Index
The United States has banned the import of Russian oil.
Inflation in the US hit 9.1%, and in the Eurozone, it is at 8.6%, while the inflation rate in the United Kingdom is at 9.4%.
Brent crude oil Is trading below the $100 mark per barrel, at multi-month lows. The US Dollar to Russian Ruble is vulnerable to the global markets.
Russia is the leading producer of oil. As crude prices move to 5-month lows, it is expected to drive the Ruble prices lower in the forex market.