Despite Sanctions, the Russian Ruble Strengthens

Since its invasion of Ukraine at the end of February 2022, Russia has faced a barrage of economic sanctions from various countries and international organizations, ranging from trade restrictions to the freezing of foreign exchange reserves.

According to Castellum data, in March 2022, Russia even held the title of the country with the most international sanctions.

Despite this, these sanctions appear insufficient to severely cripple the Russian economy. This is indicated, among other things, by the exchange rate of the Russian ruble, which has tended to strengthen against the US dollar in recent months.

According to Yahoo Finance data, the ruble's exchange rate against the US dollar did fall to an average of US$0.012 per ruble in February-March 2022, shortly after the war broke out.

However, in the following months, the ruble strengthened to reach an average of US$0.0167 per ruble in August 2022. This level is even higher than before Russia invaded Ukraine, as shown in the graph.

"The country most heavily sanctioned seems not to be suffering as much as many people expected. The Russian currency has recently been dubbed one of the strongest in the world," explained John Letzing, Strategic Intelligence at the World Economic Forum (WEF), in his analytical report on the WEF's official website in July 2022.

According to John Letzing, this ruble strengthening phenomenon is partly due to Russian fossil fuel commodities that remain in demand on the global market.

"Higher oil prices have cushioned the blow for Russia, the world's third-largest oil producer. Russia has also pursued the de-dollarization of its economy by resisting global economic pressure dominated by the dollar," explained John Letzing.

"The willingness of some countries to continue buying Russian energy is also expected to mitigate the effects of the sanctions," he added.