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Title: Rouble hits fresh highs against dollar, euro

Jun 14, 2022 08:36AM ET

By: AnalysisWatch

The Russian ruble hit a three-week high against the euro and U.S. dollar in volatile trading Tuesday, continuing to rise despite the recent interest rate cut and the looming economic crisis.

By 8:10 a.m. EDT, the ruble was up 3.6 percent against the euro to 57.94, its highest level since May 25.

Against the dollar, the ruble gained 1.5 percent to trade at 55.99, near a multi-year high.

The Russian currency was supported by capital controls imposed by Russia in late February after sending tens of thousands of troops to Ukraine, but the recent appreciation has forced policymakers to reconsider their economic measures in response to Western sanctions.

The central bank's decision last week to cut its key interest rate to pre-crisis levels of 9.5 percent should also ease upward pressure on the ruble.

A powerful ruble damages exporters' revenues and the Russian state budget, but helps importers by making foreign goods and services cost less. However, Russian imports have dropped sharply as a result of unprecedented Western sanctions and disrupted supply chains.

Yuri Popov said Tuesday that the ruble stimulated higher foreign currency sales by exporters to meet domestic tax obligations.

Savings in hard currency also "became less attractive as Russian banks introduced fees for keeping accounts in currencies of 'hostile' countries," Popov said in a research report.

On Tuesday, the Moscow Exchange said it would suspend trading in the Swiss franc against the U.S. dollar and ruble from June 10 because of sanctions imposed by Switzerland against Russia.

Russian stock indexes rose slightly after a weak start to the day.

The RTS dollar index rose 1.7 percent to 1,290.1 points after falling 2 percent in morning trading. The Russian ruble MOEX index rose 0.2 percent to 2,290.3 points.

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