Over the past month or so, the ruble exchange rate has experienced great fluctuations. After the Russian side announced the launch of special military operations on February 24, the ruble began to show signs of rapid depreciation. The exchange rate against the US dollar fell below 80 to 1 on the same day, and then went down all the way. On March 9th, it once fell below 120 to 1, a record low. However, since late March, the exchange rate of the ruble against the US dollar has rebounded significantly. Analysts believe that under the complicated geopolitical situation, the ruble market can be reversed in a relatively short period of time, mainly due to three factors.
First of all, the Russian government has introduced a number of measures to stabilize the domestic financial market. In the face of escalating financial sanctions from the United States and other western countries, the Russian central bank has taken a series of countermeasures, including raising the benchmark interest rate to 20%, restricting individual foreign currency deposits and account withdrawals, forcing enterprises to sell most of their foreign exchange earnings, temporarily prohibiting non-resident legal persons from withdrawing cash from major foreign currencies such as the US dollar, and suspending securities dealers from accepting foreign investors' entrustment to sell Russian securities.
Oleg Serovatkin, a Russian financial analyst, believes that a series of measures taken by the Russian central bank are conducive to reducing the demand for foreign exchange in the domestic market and limiting the outflow of domestic funds, thus alleviating the pressure of devaluation of the ruble.
Second, Russia-Ukraine negotiations have made positive progress. On March 29th, Russia and Ukraine held a new round of face-to-face talks in Istanbul, Turkey. Russia promised to significantly reduce its military operations in Kiev and chernigov, the capital of Ukraine, and Ukraine proposed to establish a neutral position under international security. After the negotiations, the ruble further strengthened. On that day, the exchange rate of the US dollar against the ruble fell below 1 to 83 for the first time since February 25th.
Georgi Ostap Covic, director of the Market Research Center of the Russian State Higher School of Economics, said that huge geopolitical uncertainty and western sanctions have brought downward pressure on the ruble, and positive progress in the Russian-Ukrainian negotiations is conducive to easing conflicts and stabilizing the situation, thus promoting the ruble exchange rate to stabilize and strengthen.
Third, Russia introduced the "ruble settlement order" for natural gas. Russian President Vladimir Putin announced on March 23 that when Russia supplies natural gas to "unfriendly" countries and regions such as EU member States, it will switch to rubles for settlement. After the news was released, the exchange rate of the ruble against the US dollar once jumped to the highest point in three weeks. On March 3 1 day, Putin signed the relevant presidential decree, and the new regulations came into effect on April 1 day.
Salikhov, director of the Russian Institute of Energy and Finance, said that the use of roubles for settlement can reduce the transaction costs in Russia, keep the proceeds in Russia, and reduce the willingness to short the roubles in the international market.
Igor Yushkov, chief analyst of the Russian National Energy Security Foundation and expert of the Russian Federation University of Finance and Economics, said that this move is an important measure taken by Russia to stabilize the ruble exchange rate under the pressure of sanctions. Europe is highly dependent on Russian natural gas, and the use of rubles for natural gas trade settlement will boost the international demand of rubles. In the future, Russian exports of oil, metals and other commodities may also be settled in rubles, when the value of rubles and the international trade settlement system may face reconstruction.