Are Economic Sanctions Backfiring? Ruble Exchange Rate Hits Record High, Is Putin Having the Last Laugh?

The Russian ruble has become the world's strongest currency, reaching its highest level since July 2015. Even the Russian government is preparing to cut interest rates to prevent the rise, as concerns grow that a stronger ruble will weaken export competitiveness, leading to a deterioration in government finances.

According to the latest exchange rate, the Russian ruble has reached 53.8638 against the US dollar, expanding by over 35% so far this year. Despite the Russian Central Bank cutting interest rates to 10.50% and easing capital control measures implemented in response to Western sanctions, the ruble continues to strengthen.

The Deputy Director of the Atlantic Council's Geoeconomic Center, Charles Lichfield, published an article titled "Don't Ignore the Exchange Rate: How a Strong Ruble Can Shield Russia." He pointed out that at the beginning of the Ukraine-Russia conflict, Western countries did not see the exchange rate as an indicator of economic sanctions, but now it must be reassessed. Russia relies on income from oil and gas, causing the ruble to strengthen. In addition, with Western sanctions in place, Russia achieved a record trade surplus of $38 billion in April.

Renowned economic analyst specializing in economic cycle studies and economic forecaster at ArmstrongEconomics.com, Martin Armstrong, pointed out that despite Western sanctions against Russia, data shows that Russia's oil exports increased by 620,000 barrels per day to reach 8.1 million barrels per day in April. India and Turkey have helped Russia offset international sanctions, and the EU remains Russia's largest importer, with Russian oil exports growing by over 50% in the first four months of this year despite a significant reduction in shipments.

In other words, the Western boycott has had the opposite effect, strengthening the Russian economy. "Putin laughs last because he is now selling more oil at higher prices."

Furthermore, China has been consistently buying oil from Russia. Since 2021, China has been the largest buyer of Russian oil, importing an average of 1.6 million barrels of oil per day from Russia.

At the same time, energy is currently Europe's most pressing issue, with the UK facing potential large-scale power outages, and oil becoming increasingly scarce in Europe. The Economist notes that Europe is experiencing severe energy price shocks.

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