The ruble has been on a relatively steady upward trajectory since the beginning of the year, and yesterday traded for the first time under the exchange rate of 50:1 on the dollar since last November. In total, the currency has regained 22% of its value. Most analysts point to rising oil benchmarks and Russian sovereign bond auctions seeing a huge amount of participation. Less politically minded rhetoric coming from the Kremlin and a lack of talk on additional sanctions from the EU or US have reduced the risk of being cut off once again from Western capital markets.
However, most are equally as pessimistic that the recovery will be short-lived, as the Russian Central Bank has announced it intends to cut its key interest rate again at the end of the month, which makes the currency’s inflation relative to the dollar more likely. Sacrificing this exchange rate is also an insight into priorities for the Russian economic planners, as access to credit and liquidity seem to be larger initiatives than the short-term value of the ruble. It should also be noted that many analysts seem to think that oil price shifts alone cannot explain the rise in the ruble’s value, as most notice a decoupling between the two. At the FT, the best guess is that companies are selling their rubles and buying FX to cover their external debt.
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- A Ukrainian lawmaker, Oleh Kalashnikov (not to be confused with the same Kalashnikov who invented the AK-47) was found dead in Kiev from gunshot wounds. Kalashnikov was a former member in Parliament of former President Viktor Yanukovych’s Party of Regions and police investigators suggest that as a member of the anti-Maidan movement, this could provide a motive for his murder.
- Russian oil major Lukoil has opened up an office in Tehran, as part of a larger effort to push into the untapped market amid expectations that sanctions will soon be removed. Lukoil’s VP Ravil Maganov said that the company was looking forward to participation in Iran after sanctions were lifted. Lukoil’s only non-active project in Iran to date is the Anaran oil field that it was developing with Norwegian company Statoil, but it was forced to pull out in 2011 due to increasing sanctions.
- The OSCE says ceasefire violations within Ukraine are increasing in recent days, despite the passage of the Minsk II Accords outlining a ceasefire on February 12. Shelling has increased in densely populated residential areas, indicating that heavy weaponry, despite the tenets of the deal, have not been pulled out. The OSCE asserts that “only Ukraine” is adhering to the ceasefire agreement, adding that their forces have suffered losses again after a period of no casualties.
- Kazakh President Nursultan Nazarbayev and Turkish President Recep Tayyip Erdogan met in Astana today to discuss trade, economic investment, and particularly energy ties between the two countries. The Turkish President has been on a whirlwind tour of late with various Central Asian leaders to discuss the possibilities of alternative pipelines to the EU. However, all of these would have to go beneath the Caspian Sea, requiring the cooperation of Russia, which is still highly uncertain.
- Iranian President Hassan Rouhani announced that he is not planning on renegotiating with US Congress on a potential nuclear deal, insisting that their counterpart in active negotiations is not the US Senate, but the P5+1 coalition. The comment was timed only a day after US Congress was given the authority to vote on any potential final nuclear deal with Iran that was unanimously passed by the Senate Foreign Relations Committee. The bill has set up a 30-day congressional review period and requires the Obama administration to update Congress on Iranian compliance.