The ruble stubbornly stands firm. The Russian currency overcame the first set of sanctions and easily shrugged off an adverse effect of the second sanctions package. After the United States stepped up pressure on the Russian economy, the ruble took a nosedive, but then it managed to recover its losses. Overseas investments helped the Russian currency gain ground.
Foreign investors buy Russian assets actively. The ruble even resisted a fall after oil prices declined, though usually it closely follows the commodity quotes. So, the Russian currency shows great results but some analysts say that the country’s monetary authorities may cap a rally. The government has no interest in the strong national currency as it sells the natural resources for foreign currency and pays wages and pensions denominated in rubles. Therefore, the lower the exchange rate is, the better. That is why some analysts predict that the Russian central bank will prevent a further rise in the ruble.
In fact, the Bank of Russia has already announced plans to limit appreciation of the ruble. At the nearest policy meeting, that will be held on September 15, the bank’s officials may decide to cut the interest rate by 50 percentage points to 8.5%. Moreover, the bank is expected to lower its rate to 7.5% by the year’s end. Thus, the yield of Russian assets will likely fall and they will become less attractive to investors.
