The Russian ruble strengthened against the U.S. dollar by 4.32 percent this month. When the market closed on Friday, the ruble strengthened against the U.S. dollar by 4.5 percent. Although the value dropped slightly throughout the weekend, it remained at 56.87 per dollar on Sunday. The growth followed a statement by Russian leader Vladimir Putin on Wednesday, saying the country would use "all means available" to win the Ukraine war.
The ruble has been strengthening against the U.S. dollar in the past months, especially the month after the Ukraine war broke out. The currency reached its seven-year high against the greenback at the end of June.
Other factors contributing to the rise of the ruble included Russia’s imports of its natural resources. At the beginning of September, China reportedly began purchasing fuel from Russia using the ruble in addition to the yuan. Gazprom CEO Alexei Miller said the agreement was considered “mutually beneficial” for both countries.
Reports also revealed that Switzerland had imported 5.7 tons of gold reserves worth around $324 million from Russia in August, the country’s biggest gold purchase in over two years. According to the Swiss Federal Customs Administration, the gold reserves were shipped from the United Kingdom in May. Therefore, Switzerland did not break any sanctions imposed on Russia.
Geoffrey Smith of Investing.com explained that the surge in the ruble’s value occurred after the citizens of Russia withdrew a large amount of money from their savings accounts. The reason was likely due to the “mobilization call by President Vladimir Putin.” This situation created a rising demand for rubles, which pushed its value.
U.S. dollar strengthens, other currencies weaken
Last week, the U.S. Dollar Currency Index (DXY) reached new peaks after the Federal Reserve officially announced a hike in interest rates. This move hurt other currencies in various parts of the world. On Friday, the euro reached another 20-year low, falling to $0.973. The euro further experienced a value decrease on Sunday at $0.9690.
Data from the past 30 days showed the European Union currency shed 2.82 percent of its value against the U.S. dollar. Meanwhile, the British pound sterling lost 8.17 percent against the U.S. dollar, while the Canadian dollar weakened by 4.78 percent.
The Asian currency market was also affected by the surge of the U.S. dollar. The Japanese yen went down by 4.72 percent, forcing the government to sell its U.S. greenbacks to control the drop. The Chinese yuan also went past 7:1 against the U.S. dollar this month, its lowest point in the past two years.
The growth of the U.S. dollar also affected the stock market. Last week, the Dow Jones Average Index posted a new low, closing below 30,000 and falling by more than 826 points. The S&P dropped by 4.65 percent in the same tracking period, while Nasdaq went down by 5.07 percent.
Quincy Krosby of LPL Financial said the market was more worried about the Fed’s “aggressive” campaign than inflation.
"You see bond yields rising to levels we haven't seen in years — it's changing the mindset to how does the Fed get to price stability without something breaking,” Krosby said.