Two months after the Russian ruble fell below a US penny, the intercontinental country’s fiat currency is the best-performing currency worldwide. US economists are baffled by the “unusual situation” as a country facing harsh sanctions typically sees its fiat currency fall in value, but Russia’s ruble has done just the opposite.
Russia’s ruble beats euro and dollar – transcontinental country’s fiat currency shows resilience
On February 28, 2022, Bitcoin.com news reported the Russian ruble’s record lows, and citizens began to withdraw a lot of cash, leading to what many reports called a “bank run”. At the time, Russia faced severe financial sanctions from countries opposed to the war in Ukraine. In addition, the United States, the European Commission and Western allies imposed sanctions on the Bank of Russia’s international reserves.
However, during the second week of April 2022, Bitcoin.com News reported the country’s central bank slashing rates and setting the ruble to gold. At that time, the central bank of Russia pegged the price of RUB at 5,000 rubles for one gram of gold. Russia has also made it so “unfriendly” that countries are forced to pay for gas with ruble. Many international buyers are following the rule and paying in rubles for petro products. The country’s central bank also slashed Russia’s benchmark bank rate.
That week in April, the Russian ruble returned to pre-war levels, and the fiat currency has shown resilience since then. In recent days, various headlines from Western-based media outlets have revealed that the Russian ruble is the best-performing fiat currency in the world today. Speaking with CBS, Jeffrey Frankel, a professor of capital formation and development at Harvard Kennedy School, commented that “this is an unusual situation” with respect to the ruble increase. The ruble hit record highs against the euro and the US dollar in the Eurozone.
In the same report, Tatiana Orlova, chief emerging market economist at Oxford Economics, said the rise in commodity prices has been attributed to the resilience of the ruble. “Commodity prices are currently skyrocketing, and even though sanctions and sanctions have led to a decline in the volume of Russian exports, the increase in commodity prices more than compensates for these drops,” Orlova explained. Orlova further elaborated to CBS that there is a huge discrepancy between exports and imports in Russia. The Oxford Economist said:
It is our coincidence that as imports have declined, exports are increasing.
Orlova also discussed capital controls enforced by Russia’s central bank and how foreign holders of stocks and bonds cannot receive dividends internationally. “It used to be an important source of currency outflows from Russia – that channel has now closed,” the Oxford economist concluded.
Meanwhile, in the United States, the Biden administration is grappling with hot inflation and the president has a hard time discussing the issue, according to a report by New York Times contributors Zolan Kno-Youngs and Jenna Smilek. Biden is claiming that That “America is in a stronger economic position today than any other country in the world.” Biden has been blaming Russian President Vladimir Putin for US gas hikes it is called “Putin price hike.”
What do you think about the performance of the Russian ruble in 2022? Let us know what you think about this topic in the comment section below.
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