Jun 29, 2022 08:21AM ET
By: AnalysisWatch
The ruble pared gains during volatile trading on Wednesday as Russia's finance minister pointed to possible interventions to ease pressure on the currency after it approached 50 against the dollar for the first time since May 2015.
The ruble has become the world's best-performing currency this year, buoyed by measures-including restrictions on Russian households withdrawing foreign currency savings-taken to shield Russia's financial system from Western sanctions imposed after Moscow sent troops into Ukraine on Feb. 24.
The strong ruble is raising concerns among officials and export-oriented companies as it reduces Russia's revenue from selling raw materials and other goods abroad for dollars and euros.
Many Russian companies, mostly exporters of goods other than oil and gas, are already experiencing financial difficulties, says Yevgeny Suvorov, an economist at CentroCreditBank.
At the same time, Finance Minister Anton Siluanov said Russia may cut government spending and channel funds into currency interventions to contain a strengthening ruble that threatens budget revenues.
Following the comments, the ruble pared its gains and was 0.4 percent weaker on the day at 52.00 per dollar, having reached 50.01.
Receipts from commodity exports, a sharp drop in imports and the payment of taxes in roubles at the end of the month by export-oriented Russian firms were additional factors in the currency's appreciation.
Since the beginning of the year, the ruble has risen nearly 44% on the Moscow Exchange but remains much weaker in banks. VTB, Russia's No. 2 bank, has offered to sell dollars and euros in cash at 63.45 and 67.85, respectively.
Against the euro, the ruble was 0.6% stronger at 54.20, having earlier topped 53 for the first time since April 2015.
On the stock market, the dollar-denominated RTS index fell 1.1% to 1,449.1 points. The Russian MOEX index, which is denominated in rubles, fell 1% to 2,384.5 points.