Moscow: The Russian ruble has almost completely recovered from the drop suffered from the sanctions imposed by the United States and its allies.
The ruble was valued at 79.7 ruble per dollar at closing on Thursday.
Less than a month ago –the ruble had recorded a new low of about 121.5 ruble to a dollar.
The Russian currency is now approaching the value of the Indian rupee. The exchange rate for India is Rs 75.99 per dollar.
The rapid recovery of the ruble is a major victory for the Russian President Vladimr Putin over Joe Biden who had earlier dismissed the currency as ‘rubble’.
With the aim of supporting the ruble, the Russian Central Bank announced pegging the currency with gold — one gram of gold is currently pegged at 5000 ruble. The move is expected to increase the flow of gold into the kitty of the Russian Central Bank.
With Russian gold coming under sanctions, the country’s gold stocks — from banks as well as individuals could be sold to the central bank. The value of the ruble will further increase once the central bank’s gold stocks from domestic sources increase, which is expected to happen in the next few months.
Besides, Russian President Vladimir Putin also signed an agreement under which foreign buyers will be required to pay ruble for gas purchase. India and even European countries — especially the smaller ones — have now already started to pay ruble to purchase Russian gas.
Most of Europe, including Germany, is dependent on Russia for natural gas and oil.
Any currency backed by gold is perceived to be stabler and stronger.
Russia’s gold reserves are estimated at more than 2298.53 tonnes. It is the fifth largest in the world, the US ranks number one, followed by Germany, Italy and France.
The State Bank of India in its report said that anchoring the currency to gold will help stabilize domestic inflation as well.
The dip in Russia’s imports following the Ukraine war is also expected to improve its trade deficit and reflect positively on the ruble,
The Russian ruble’s near complete recovery in recent weeks is not a signal that the Russian economy is weathering the sanctions Washington and its allies have imposed since Russia invaded Ukraine, U.S. Treasury Secretary Janet Yellen said on Wednesday.
The Russian economy is “reeling” from the sanctions imposed after the late February invasion, Yellen told the House Financial Services Committee. The market for rubles has become so distorted by actions of the Russian government and its central bank to limit capital outflows that “you should not infer anything” from the value of the ruble, which fell to a record low against the U.S. dollar immediately after the invasion but has since retraced most of those losses.
(With inputs from IANS, Reuters.)
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