The exchange rate of the Russian ruble (RR) is continuing to rise while the exchange rate of the U.S. dollar (USD) is decreasing in Tajikistan.
The official exchange rate of RR against TJS set by the National Bank of Tajikistan (NBT) on May 24 is1: 0.1725 (almost 0.3-percet increase compared to May 23, when the exchange rate of RR against TJS was 1:0.172).
It is already the third such a record high reached by RR since late February this year. On April 11, the NBT set the exchange rate of RR against TJS at 1:0.171.5
Meanwhile, the exchange rate of the dollar (USD) against TJS decreased from 1:12.10 on May 23 to 1:11.80 on May 24 (almost 3.-percent increase).
The exchange rate of the euro against the somoni also decreased from 1:12.78 on May 23 to 1:12.57 on May 24.
Bloomberg News reported on May 23 that the ruble is more than 30% stronger against the dollar than it was before Russia sent troops into Ukraine on February 24, triggering harsh sanctions from the US and its allies.
The restrictions, combined with a collapse in imports amid the sweeping sanctions the US and its allies imposed on Russia, all but eradicated demand for foreign currency just as supply surged thanks to high prices for largely unsanctioned energy exports.
The latest bout of ruble strength appears to be fueled by European companies complying with Russian President Vladimir Putin’s demand that they switch to paying in Russia’s currency for natural gas.
In just four trading sessions the ruble has reportedly jumped about 15% against the euro. Against the dollar, the Russian currency trimmed earlier gains slightly to trade up 4% at 57.9350, poised for its strongest close since April 2018.
Experts, however, say the Russian ruble's rally is largely artificial, the result of capital controls imposed by Moscow in the wake of Western sanctions. While the ruble may look promising on paper, in reality, many money changers have stopped dealing in the currency because of the extreme volatility in its exchange rate due to low trade volumes.
“The ruble is solely trade-driven, and we are probably sitting at the peak of the current-account surplus,” Tatha Ghose, the senior EM economist for Commerzbank in London, was cited by Bloomberg News as writing in a note Monday. “Under most scenarios, the exchange rate would be weaker in the coming quarters,” he added.
Ruble strength is also potentially bad news for the budget, which gets a substantial chunk of revenues from energy taxes denominated in foreign currency but spent in rubles.
“The stronger the rate, the bigger the deficit will be,” said Yevgeny Kogan, a professor at Moscow’s Higher School of Economics. “And it makes things harder for exporters, raising costs and reducing revenue” in ruble terms.
“If this lasts for, say, half a year, it will be extremely unpleasant,” he said, noting that a more “comfortable” rate for the economy would be around 75-80 per dollar.
