(Bloomberg) — The ruble is staging a comeback that could soon see it making up all of the losses it suffered in the weeks after Russia invaded of Ukraine, although it has some way to go yet.
The currency has strengthened in 13 of the past 14 trading sessions in Moscow, paring most of the 33% decline that it incurred in onshore trading after President Vladimir Putin sent Russian troops to invade Ukraine. The ruble was up again on Tuesday, strengthening more than 4% on the day to around 86 per U.S. dollar, edging close to its pre-war level.
“The ruble’s rebound has really been the result of policies by the Central Bank of Russia to enforce buying and limit selling,” said Natalie Rivett, senior emerging market analyst at Informa Global Markets Ltd. “A ceasefire between Russia and Ukraine would likely help to support the ruble, but it’s difficult to envision any sustainable appreciation.”
Still, the dollar-ruble currency pair is only around 6% away from a key mark of 81.16, the level it closed on Feb. 23, the day before Putin launched a long-anticipated military invasion on Ukraine.
Returning to such levels would be a challenge given Russia’s isolation after the U.S. and allies imposed sweeping sanctions, Rivett said.
Guillaume Tresca, a senior emerging-market strategist at Generali Insurance Asset Management, echoed lingering risk in the currency, which isn’t in a typical, functioning market.
Capital controls imposed by the central bank, meant to keep cash from leaving the country, have offered some support for the ruble. Russia has also moved toward requiring that natural-gas sales be conducted in rubles, though the largest industrialized countries have rejected the demand.
“The strengthening has to be taken with a pinch of salt,” Tresca said. “The RUB strengthening is fragile, more driven by technical factors than a real economic improvement.”
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