Ruble is top performing currency

MOSCOW: Russia’s ruble has surged to become the best performing global currency, posting this year’s strongest gains against the dollar to outpace even the traditional safe haven of gold.

The ruble has strengthened 38 percent versus the dollar on the over-the-counter market since the beginning of this year, data compiled by Bloomberg shows. While the greenback has reeled from mounting pressure caused by US President Donald Trump’s escalating tariff wars, Russia’s currency has also been buoyed by factors unique to the country, including record-high local interest rates.

“Unlike many emerging-market currencies, the ruble is not facing pressure from capital outflow, caused by global investors’ retreat from riskier assets,” said Sofya Donets, an economist at T-Investments. “Capital controls have largely shielded Russia from this” while high borrowing costs support the currency, she said.

Domestic factors have amplified the ruble’s gains against the weakening greenback, even as sweeping sanctions imposed by the US and its allies over the February 2022 invasion of Ukraine remain in place. While a strengthening currency may be welcome news for inflation hawks, it risks damping energy revenue when the state is spending massively on military needs and social programmes.