Biden mocked the ruble as “rubble.” But the Russian currency has rebounded.

The value of the Russian ruble fell by 30% after the United States, the European Union and the United Kingdom issued sanctions for the first time in response to the nation’s war against Ukraine. This fall, which in early March reduced the value of the ruble against the US dollar a less than 1 cent – urged President Biden last month to mock the currency as “rubble”.

But the ruble has recovered, almost doubling in value from its lowest point on March 7. Recent gains have pushed the currency back to its level before the US and other nations imposed sanctions.

Reasons for this rise include support from the Russian government as well as ongoing purchases of Russian energy from the European Union and other nations, Jane Foley, head of foreign exchange strategy at Rabobank London, told CBS News. Even with broad-based sanctions, Russia continues to export oil, gas and coal, with Bloomberg Economics estimating that the country’s energy exports will increase by a third this year to $ 321 billion.

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President Vladimir Putin has also established “massive capital controls” to stabilize the ruble, strengthening the currency, Foley said.

“This stability in the Russian ruble is proving to be beneficial for the economy,” he said. “The Russians are returning money to their own banks. This is helping to support the Russian ruble.”

Despite the recent recovery of the ruble, the international effort to isolate Russia is taking one a strong impact on their economy. The country’s gross domestic product will fall by 15% this year, according to a recent forecast by the International Finance Institute. To put it in perspective, the U.S. GDP fell 3.5% in 2020, when the pandemic caused much of the country’s economy to close.

“Russia has not had a recession of this magnitude since the 1990s,” said Elina Ribakova, the IIF’s deputy chief economist, in a report. “This is an unprecedented shock to the Russian economy.”

Russia has banned foreigners from selling any assets they own in the country. This has prevented some Western companies that have stopped doing business in Russia from selling their properties, factories or other assets in Russia.

“There are 400 companies that have said they are withdrawing from Russia and would like to sell assets but cannot,” Foley said.

Russia has also said that “non-friendly” nations should pay for energy exports in rubles, a measure created to support the currency, but the edict may not have much effect, according to a new analysis by the Bank of Russia. St. John’s Federal Reserve .

The biggest problem is Europe’s dependence on Russian energy, Foley said. Although the EU has agreed to ban Russian coal, a radical embargo on oil and natural gas has yet to be agreed, which would have a greater impact on the Russian economy. This is largely because a ban on Russian energy imports could lead to a recession in Europe.

Meanwhile, European imports of Russian energy are “getting a lot of rubles in Russia … and that means they are able to mitigate the blow to the economy,” he said.

In:
• Economy
• Russia