The United States dollar has become stronger recently, as reportedly only three other currencies in the world have been able to gain against it in exchange rates — and one of those currencies has had what may be considered to be such an unbelievable surge that it is currently considered the best performing currency in the world in 2022.
Unbelievably, The Best Performing Currency of 2022 As of Now Is…
That currency is the Russian ruble, which recovered from record low valuations earlier this year and is actually currently valued higher than prior to the invasion of Ukraine by military forces of Russia on Thursday, February 24, 2022 and surpassed the advance by the Brazilian real.
The exchange rate at the time this article was written on Monday, May 16, 2022 was that one Russian ruble was equivalent to 0.0155105 United States dollars — or that one United States dollar was equivalent to 64.4765 Russian rubles. That is approximately double the exchange rate of one Russian ruble being equivalent to 0.00769279 United States dollars — or that one United States dollar was equivalent to 129.9992 Russian rubles — on Tuesday, March 8, 2022; and the Russian ruble has not been this valuable since February of 2020.
Capital controls — as well as a series of measures — which were imposed by Russia have contributed to the recent stellar performance of the ruble in response to sanctions which have been imposed by Western countries…
…but a significant factor of the increase in value for the ruble is that countries which are dependent on energy fuels from Russia are required to pay for oil and natural gas in rubles instead of dollars or euros. Some of the external trade and financial restrictions are based on trading in dollars or euros. Russia has been able to successfully navigate around some of those sanctions with the requirement to pay for its exports in rubles — and not only has the natural gas market currently remained largely unaffected by the sanctions; but the European Union has yet to place an official embargo on oil from Russia.
The ruble is “now up more than 11% against the US dollar since the start of the year, surpassing the real’s 9% advance to become the top gainer among 31 major currencies tracked by Bloomberg”, according to this article written by Davison Santana for Bloomberg. “Still, the irony of the ruble performing so well while at war is remarkable, especially as other countries that imposed capital controls in the recent past have not achieved the same results. Turkey and Argentina tried similar measures when they faced a horde of sellers in the past few years with disastrous consequences for the lira and the peso, which reached fresh all-time lows and never recovered.”
Final Boarding Call
If you believe that you might have missed out on an investment opportunity, you might want to think again: some strategists have expressed their opinions that this remarkable rally is not credible, as many exchange places which trade currency have stopped dealing in the ruble on the grounds that its value which is seen on monitors is not the price at which it can be traded in “the real world”.
Meanwhile, the contraction of exports of oil from Russia has contributed to the sharp increases in gasoline prices worldwide — including in the United States, where the national average price for a gallon of gasoline has reached another record level of $4.483, according to the American Automobile Association.
Still, I do not believe that Russia is having the last laugh all the way to the bank, as shortages of products are among the results which have significantly hurt the economy domestically in that country — but the substantial increase in the value of a currency on a country which sanctions have been placed seems to be rather counter-intuitive…
Photograph ©2020 by Brian Cohen.
