FX.co ★ Ruble Holds Stable Range

In November, the Russian ruble stabilized at 81.5 per USD, maintaining its position in a narrow band since the second quarter. This stability is primarily due to stringent capital controls and elevated interest rates, which are balancing the repercussions of new sanctions and a bleak economic outlook for Russia. The United States imposed sanctions on major Russian energy firms Lukoil and Rosneft, thereby challenging Russia's energy export prospects to India, a significant consumer of Russian oil since the 2022 invasion of Ukraine. Additionally, the European Union announced its intention to cease imports of Russian LNG by 2027. Nonetheless, these measures had a limited effect on the ruble, as the Russian government requires export-driven companies to convert 40% of their foreign exchange earnings. Furthermore, the Bank of Russia committed to maintaining restrictive monetary policies through next year to mitigate inflation risks, despite unexpectedly lowering rates by 50 basis points. The cumulative impact of Western sanctions, prioritization of military expenditures over economic growth, and the high cost of borrowing have led the International Monetary Fund (IMF) to project that Russia's GDP will grow by a mere 0.6% this year.