The economist explains to RT the reasons for the growth of the Russian ruble against the dollar despite the sanctions

In an exclusive statement to RT, Egyptian economic expert Mostafa Abdel Salam explained the reasons for the appreciation of the Russian ruble against the US dollar, despite the ferocity of the West in its sanctions against the Russian economy.

Abdel Salam said that after the start of the Russian military operation in Ukraine, “Western sources and international investment banks expected many years of depreciation of the ruble against the dollar and disruptions in the Russian foreign exchange market, which would negatively affect investments.” climate and force foreign investment to flee.”

He added that they based their expectations on several factors, including the success of Western heavy sanctions against the Russian economy and its destruction, which did not happen, as well as the West freezing about $300 billion of the $640 billion Russia holds in Western countries. central banks in the form of cash reserves, gold and foreign exchange, and the persistence of the Western alliance. With regard to the draining of Russia’s sources of financial resources, which it uses to finance its operations in Ukraine, the insistence of the United States and its legal successor Europe to ban the import of Russian oil and gas and a flight of hot money invested in Russian bonds, but those expectations for the Russian currency have collapsed recently as the currency has risen to higher levels since May 2015.

And he added: “The cohesion of the ruble against the dollar is due to several reasons, first of all, the support of the Russian currency by the authorities, especially in the first days of the military operation, so that it does not slip, the stability of the Russian economy. in the context of Western sanctions and the limited success of plans to limit the export of Russian energy resources by the West, with an increase in demand for Russian oil, they are supplied by the countries of Southeast Asia, primarily China and India.

He pointed out that another reason supporting the strengthening of the ruble is the rise in oil and gas prices in international markets, which provided huge liquidity to the Russian economy. Russia’s energy revenues are the most important source of foreign exchange, exceeding $100 billion a year. .

He added that, according to the Center for Energy and Clean Air Research, Russia received $100 billion in fossil fuel revenues in the first 100 days after the special operation in Ukraine, despite a drop in exports last May.

He stressed that “according to the latest data, Russia has become the largest oil exporter to China, as it sold crude oil to Beijing at preferential prices in the midst of sanctions, and China increased oil purchases from Russia, despite reduced demand due to the coronavirus pandemic, shutdowns and economic slowdown.”

He pointed to Russian President Vladimir Putin’s decision to sell gas to “unfriendly” countries in rubles rather than dollars or euros to support the Russian currency.

He explained that the Central Bank of Russia professionally coped with the crisis in the foreign exchange market, after the start of the military operation and the fall of the ruble in the first days, the bank took urgent decisions to strengthen the national currency and limit the exchange rate. drain replacement.

He pointed out that among the decisions were raising the ruble interest rate to 20% from 9%, imposing severe restrictions on money transfers abroad, preventing Russians from transferring any foreign currency outside the country, and imposing a ban on foreign currency. sale of Russian assets, as well as coercion of exporters. The Russians must convert 80% of their dollar revenues into rubles, adding: “It is true that most of these decisions were later withdrawn, but they played a big role in strengthening the ruble. .

He emphasized that the strengthening of the ruble intensified after Russia assumed obligations to repay its external debt in installments, despite the expectations of international rating institutions of a default, especially in the context when the West froze about half of its foreign exchange reserves, as well as the refusal of the US President to several European countries Joe Biden’s decision to impose a comprehensive ban on Russian oil and gas, as well as the statement of China, the world’s largest consumer of energy, did not rule out the use of the ruble and yuan in energy deals with Moscow instead of the dollar.

He explained that the ruble received support from tax payments, as companies paid a record 3 trillion rubles ($37.50 billion) in taxes, which will encourage some companies operating in the export and tourism sectors to sell foreign currency to obtain liquidity in rubles to pay their taxes.

Nasser Hatem – Cairo

Source: RT

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