Ruble returns to multi-year highs

The Russian currency has continued to strengthen against the dollar and the euro in spite of sanctions

The ruble soared on the Moscow Exchange on Tuesday, setting new highs against the dollar and the euro. The rally comes as Russia’s central bank has restored its key interest rate to pre-war levels.

The Russian currency briefly touched 55.63 rubles to the dollar on Tuesday, its strongest exchange rate against the US currency since February 2018. The ruble was also trading below 58 against the euro, close to a seven-year high reached in May. The Russian currency gave up some of the gains later in the session.

The currency retained support from capital controls and Russia’s strong trade account, economists say. The accelerated growth was also driven by the rising price of oil and the start of the June tax period for exporters.

READ MORE: Russia restores interest rate to February mark

Last week, the Russian central bank slashed its key rate to 9.5%, noting that inflationary risks for the country continue to subside. The regulator more than doubled rates in February, from 9.5% to 20%, after Russia was hit with an avalanche of sanctions by the US, the EU, and other countries. The hike was intended to prop up the ruble, which had fallen to record lows. The Russian currency has since become the world’s best performing currency this year, according to Bloomberg.

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