Hello. It looks like you�re using an ad blocker that may prevent our website from working properly. To receive the best Tortoise experience possible, please make sure any blockers are switched off and refresh the page.

If you have any questions or need help, let us know at memberhelp@tortoisemedia.com

The recovering Russian ruble

The recovering Russian ruble


When Russia invaded Ukraine, the country’s currency tumbled. More than a month on, it looks like it’s bounced back. But has it?

“The Russian ruble opening for trade on Moscow’s exchange after being closed for several days and it’s sharply lower as you might expect…”


When Russia invaded Ukraine on the 24th February, the Russian ruble tumbled.

“We were hearing earlier in the hour the Russian economy is plunging, taking a direct hit from the sanctions announced by Ukraine’s allies…”


The currency lost roughly half of its value. Before the war 84 rubles were worth one US dollar and it fell as low as 154 rubles to the dollar by March 7.

News that the US government would ban imports of Russian oil and gas, combined with a raft of sanctions against Russia by Western countries crippled the currency.

“The US, Canada and European allies are cutting off key Russian banks from the SWIFT global banking system, the move is seen as the harshest financial sanction imposed so far on Russia.” 


It quickly sparked a nationwide rush to withdraw cash.

Panicked Russians stood in long queues at ATMs in an attempt to get hold of foreign currencies as fear grew that the value of their savings would plummet. And this rush for cash forced Russian banks to borrow heavily from the central bank so they could meet the demand for withdrawals.

In an attempt to protect its currency, the central bank closed the Moscow stock exchange and raised interest rates from nine and a half per cent to 20 per cent. 

But just shy of a month on, Moscow’s stock exchange reopened with heavy conditions, and by Wednesday last week, the ruble had bounced back from its fall. 

So, what’s really going on with the ruble?


In an attempt to cut Russia off from the global economy, the US and its allies froze assets held by the Russian central bank.

“Vladimir Putin has stashed away a mountain of cash to use as a powerful financial shield. Russia has the fourth largest foreign exchange reserve in all the world, their assets held by a central bank in foreign currency and gold reserves.” 


The assets were nicknamed Vladimir Putin’s “war chest”…

“In total, Russia’s foreign exchange reserves total more than $630 billion…”


And the move stopped Russia from being able to use any international reserves. Their assets are essentially stuck.

Sanctions also stopped large parts of the West from taking part in any transactions involving the Russian central bank.  

In response, it imposed strict capital controls to conserve any foreign cash.

“For example, exporters have to sell eighty per cent of their foreign currency earnings back to the central bank. There’s a ten thousand dollar limit on individual Russians’ dollar withdrawals over a six month period, a five thousand dollar limit on sending money abroad and a ban on Russians’ buying foreign stakes in domestic assets…”


Limits on currency exchange, withdrawals, and hard-currency transfers overseas are all helping to prop up the ruble.

And suggestions that the Kremlin was more open to cease-fire talks with Ukraine also helped. 

But some of the recovery being reported is artificial and the actions taken by the bank are returning Russia’s financial system to the way it was under the USSR. 

It’s a strategy that may work well in the short term, but isn’t sustainable.


Then there’s the other factor: Russia is still exporting oil and gas and that’s bringing a flood of hard currency into the country.

Bloomberg estimates that Russia’s economy is on track to see $321 billion in energy exports this year, an increase of more than a third from 2021. 

The spike in energy prices linked to the war only increased Russia’s energy revenues, which made up around 40 per cent of the country’s federal budget last year.

“Prices have gone up quite significantly so for the time being of course Russia has been collecting a lot more cash as a result of oil and gas prices being so high…”

Vicky Pryce, Centre for Economics and Business Research, Money Talks

To put it simply, oil and gas is an economic lifeline for Russia. 

That puts more pressure on countries like Germany, which are highly dependent on Russian gas, to ban imports from Russia entirely. But the German chancellor Olaf Scholz is still reluctant.

Through manipulating currency controls, the ruble appears to be recovering for the time being, an image Russian president Vladimir Putin will be keen to convey.

As for the long-term cost of Russia’s invasion, it’s likely the ruble will pay a heavy price. 

Today’s story was written and produced by Imy Harper.