FX.co ★ Russian Ruble Halts Rally

The Russian ruble has stabilized at 79 against the USD, pausing its upward momentum after reaching a two-year high of 76.8 earlier in July. This comes as the Central Bank of Russia (CBR) contemplates potential interest rate cuts. Recently, the CBR reduced its rate by 200 basis points to 18% and hinted at further reductions within the year to stimulate economic growth. Despite this, real interest rates in Russia remain among the highest globally. Year-to-date, the ruble has appreciated by 40%, largely due to capital controls implemented by the Kremlin. Under Moscow's recent directive, companies are required to sell 40% of their foreign revenue until April 2026, though reports indicate that firms are actually divesting 70% of their earnings. Concurrently, the shrinking Russian economy and Western sanctions have been restricting domestic businesses from importing goods and services, dampening the demand for foreign currency. The European Union's latest sanctions package extends to additional Russian banks and shadow tankers involved in transporting Russian energy and includes a reduction in the permissible price for purchasing Russian oil, now set at 15% below the market rate.