Russia’s currency, the ruble, has recovered from much of the devaluation suffered in the aftermath of Western sanctions imposed due to Moscow’s attack on Ukraine. The recovery has put additional pressure on Washington for a stronger response.
On Feb. 24, when Russia invaded Ukraine, the ruble was trading against the U.S. dollar at an exchange rate of around 81. After the United States and the European Union imposed sanctions, the exchange rate spiked to about 158 rubles on March 7. As of March 31, 16:58 UTC, the ruble was trading at around 83 against the dollar, almost reaching back to the level at which the currency was trading when the war began.
The market movements of the ruble are, to an extent, decided by artificial forces. The currency is being influenced by state capital controls, including a ban on buying dollars and euros. The Russian central bank has demanded that exporters exchange 80 percent of their hard-currency revenue for rubles, thereby creating new demand for the currency.
“Yes, this is not a freely determined ruble exchange rate, but we could have easily seen a scenario where a [central bank] would have not managed to prevent further ruble depreciation even with emergency measures. Furthermore, Russia is continuing to enjoy large [foreign currency] inflows as it is still selling commodities,” Elina Ribakova, deputy chief economist at the Institute of International Finance, said to The Washington Post.
The Russian currency will also get a push from Moscow’s move to force some major buyers of oil and gas to pay in rubles. Russian President Vladimir Putin announced on March 31 that he has signed a decree to this effect.
“Unfriendly” nations must open ruble bank accounts with Russian banks to pay for gas beginning April 1. Those who do not comply will see their existing gas procurement contracts with Russia terminated, Putin warned.
The White House has argued that the impact of sanctions would take weeks or even months to materialize. However, with the ruble recovering its value, the Biden administration is facing pressure to do more to punish Russia.
“The ruble’s rebound would seem to indicate that U.S. sanctions haven’t effectively crippled Russia’s economy, which is the price Putin should have to pay for his war,” Senator Pat Toomey (R-Pa.) said to AP. “To give Ukraine a fighting chance, the U.S. must sever Putin’s revenue stream by cutting off Russian oil and gas sales globally.”
Sen. Sherrod Brown (D-Ohio), chairman of the Senate Banking, Housing, and Urban Affairs Committee, said that lawmakers are looking at ways to expand Washington’s sanctions.
British Prime Minister Boris Johnson has asked G7 nations to “intensify sanctions” against Russia until “every single one” of Moscow’s troops is out of Ukraine.
As to what the United States can do more to further corner Russia, Deputy U.S. Treasury Secretary Wally Adeyemo’s recent speech in London gives some clues.
“We are going to increasingly focus our efforts on going after industries that are critical to Russia’s ability to project power, purchase the military equipment necessary to continue the war effort, and invest in the other tools of repression that are a part of the Kremlin’s playbook,” Adeyemo said.