It’s official, as of right now the Russian ruble is worth more US dollars than before the invasion of Ukraine.
On the 22nd of February this year, one US dollar would exchange for just over 79 rubles. As of the time of writing, it is now 78.
The same is true of the British pound (around 108 rubles before, 102 now), and the Euro (88 rubles before, 84 now).
Across the board, the ruble is stronger than before the war. So, how has this happened?
Aren’t NATO, the EU and the rest of the “international community” meant to be crippling the Russian economy with biting sanctions?
Reminder: In 2014, when the west sanctioned Russia over the Crimean referendum, the ruble lost almost half its value.
It recovered slightly in 2016, and has since stabilized, but has never come close to its pre-Crimean worth:
So, presumably the earlier sanctions didn’t have a “loophole” in them, and/or the Russians either weren’t aware of this “financial alchemy” back then, or simply decided not to use it.
Of course there is one key difference between 2014 and 2022 – the oil market.
As we have written before, in 2014/15 the US and Saudi Arabia flooded the market with cheap oil and crashed the price. Russia (and Iran, and Venezuela) all suffered huge economic damage from this move.
But far from repeating this tactic, Saudi Arabia has increased their prices.
Meanwhile, Turkey has just suspended the trial of the Saudi citizens alleged to have murdered journalist Jamal Khashoggi, a move that should please the Saudi government no end.
The West seems as bad at “punishing” their misbehaved allies as they are at tanking the value of the Russia’s currency.
To sum up – The price of oil is going up and the ruble is worth just as much as it was before the war.
Last week we wrote a piece asking “Is Russia the REAL target of Western sanctions?”
As the war continues, and the ruble strengthens, the answer is becoming pretty obvious.