May 23, 2022 04:50AM ET
By: AnalysisWatch
The Russian ruble strengthened on Monday and is on track to return to multi-year highs it reached against the dollar and euro last week, supported by capital controls and an upcoming end-of-month fiscal period.
At 03:54 AM ET, the ruble was trading 2.5% stronger against the dollar at 58.74, not far from 57.0750, the strongest level since late March 2018, reached on Friday.
Against the euro, it rose 2.3% to 61.38, approaching the highest level since June 2015 (59.02), also reached on Friday.
The ruble has gained about 30% against the dollar this year despite a widespread economic crisis in Russia, making it the strongest exchange rate, although it has been artificially propped up by controls introduced in late February to protect Russia's financial sector following the deployment of tens of thousands of troops to Ukraine.
The ruble is driven by export-oriented companies forced to convert their foreign exchange earnings after Western sanctions froze nearly half of Russia's gold and foreign exchange reserves.
Russian demands that foreign buyers pay for their gas in rubles have also contributed to the ruble's recent rise, analysts said last week.
BCS Express said in a note. Foreign exchange supply from exporters, high oil prices, and the upcoming month-end tax period, which typically prompts export-oriented companies to convert their foreign earnings into rubles to pay local debts, are supporting the Russian currency.
The Vedomosti daily reported Monday, citing sources, that the Central Bank had started buying foreign currencies to stop the ruble's uncontrolled appreciation.
The Central Bank denied the report, saying, "This information does not correspond to reality."
If the central bank carried out such interventions, the impact on the ruble exchange rate would be more noticeable, analysts at Promsvyazbank said.