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News Analysis: Russian ruble strengthens amid external influences

Xinhua, March 5, 2015 Adjust font size:

After reaching the lowest level at 69.6 against the U.S. dollar at the beginning of February, the Russian ruble has significantly recovered and reached 61.8 on Thursday.

The strengthening of the ruble was a reflection of the upward trend of oil prices, which gained 16 percent in February.

According to Russian experts, the peaceful progress in eastern Ukraine and the Russian Central Bank's measures also made positive contributions to the stabilization of the ruble.

Mark Rubinstein, managing director of Rossiyskiy Credit Bank, said that the eased tension in eastern Ukraine after the Minsk cease-fire agreement signed on Feb. 12 helped to lift some pressure on the ruble.

Local media reports elaborated that the ruble's strengthening trend is linked to the optimism about the easing of Western sanctions against Russia, considering the ongoing weapon withdrawal and generally observed cease-fire in the Donbass region.

In January, when oil prices rose by 2 percent, the ruble still lost 9 percent of its value against the U.S. dollar because of fears for new sanctions, according to the Moscow Times.

Managing director of Finam Investment Agency, Nikolai Solabuto, expected that the ruble's stabilization will persist in the near future as Russia's Central Bank has been taking "aggressive actions" to sweep out possible currency speculators.

Both experts believe that the ruble's steady recovery would positively influence Russia's business activities and inflation rate.

"A strong ruble encourages business activities and customers' positive inflationary expectations," Rubinstein told Xinhua.

He noted that retail prices would be further stabilized in the next few months or even up to the end of the year, given the ruble's steady appreciation.

Solabuto stressed that the ruble's exchange rate depends mostly on external factors, which are out of the Russian government's control.

He also warned that any rapid change in the national currency's value, upward or downward, could shake normal business processes in Russia. Therefore, a comprehensive perspective is needed in analyzing the general economic situation in the country.

"When the outside factors subside, the efforts of the Russian government and the Central Bank will help speed up the ruble's appreciation." Endi