22.12.202515:19:36UTC+00Russian Ruble Hovers Near 5-Year High

In December, the Russian ruble hovered around the 78 mark against the US dollar, closely following a nearly three-year high of 76.5 earlier in the month. This valuation resulted from reduced demand for foreign currencies and elevated interest rates imposed by the Bank of Russia. Due to sanctions on the Russian central bank and pivotal companies, domestic market participants faced restrictions in conducting transactions with foreign currency, leading to a significant drop in the dollar exchange rates set by the Central Bank of Russia (CBR) throughout the year. Notably, ruble pair trading experienced a dramatic 96% decrease compared to levels before Russia's invasion of Ukraine. CBR data further revealed that nearly 60% of Russian exports were settled in rubles, a marked increase from 14% in 2021. Recently, additional sanctions targeted major oil companies including Lukoil and Rosneft. Concurrently, the European Union announced plans to eliminate Russian LNG imports by 2027. In a recent monetary policy move, the CBR lowered its key interest rate by 50 basis points to 16.5%, while indicating that rising inflation expectations might constrain the potential for more relaxed financial conditions.