MOSCOW – The Russian rouble strengthened on Friday, heading back past the 61 mark against the dollar and recovering some ground after falling sharply from multi-year highs in the past week, as the market priced in possible foreign currency interventions.
The rouble hit more than seven-year highs just over a week ago, but then shed around 20% against the greenback as several officials voiced concerns about its strength, which dents Russia’s income from exporting commodities and other goods priced in dollars and euros.
At 07:34 GMT, the rouble was 1.4% stronger against the dollar at 61.11, pulling away from more than five-week lows hit on Wednesday and hitting a three-day high of 60.70.
It had gained 2.6% to trade at 61.98 versus the euro.
“Although expectations persist that FX interventions will be initiated, the fundamental situation for now still favours a stronger rouble,” said Promsvyazbank analysts in a note according to Reuters, adding that the rouble could return to 60 to the dollar on Friday.
The rouble is still the world’s best-performing currency so far this year, boosted by measures – including restrictions on Russian households withdrawing foreign currency savings – taken to shield Russia’s financial system from Western sanctions imposed after Moscow sent troops into Ukraine on Feb. 24.
The currency has also benefited from soaring proceeds from commodity exports and a sharp drop in imports.
Brent crude oil, a global benchmark for Russia’s main export, was up 0.2% at $104.8 a barrel on Friday, but was trading above $120 a barrel a month ago.
Robin Brooks, chief economist at the Institute of International Finance said lower oil prices as global recession fears rise were behind the rouble’s recent fall.
“This is real-time validation how effective the G7 price cap can be,” Brooks wrote on Twitter. “The cap cuts hard currency flows to Russia. (The) rouble will weaken, interest rates spike and recession deepens.”
The Group of Seven economic powers have drawn Moscow’s ire in agreeing to explore imposing a ban on transporting Russian oil that has been sold above a certain price.
Russian stock indexes were mixed.
The dollar-denominated RTS index was up 0.9% to 1,142.1 points. The rouble-based MOEX Russian index was 0.5% lower at 2,216.3 points.
