Brad Marchand scores in 2OT, Panthers steal Game 2 vs. Oilers in Stanley Cup

The Russian ruble has staged a stunning rally in emerging as the world s top-performing currency so far this year According to the Bank of America it has been the best-performing currency since the start of the year In the midst of a long-drawn war declining oil prices stiff sanctions and an commercial sector that s on the downhill Russia s ruble has been rising In fact it is the world s best-performing currency so far this year according to Bank of America with gains of over The ruble s stunning rally in marks a sharp reversal from the past two years when the currency had depreciated dramatically What s powering the Russian currency The strength in the ruble has less to do with a sudden jump in foreign investors confidence than with capital controls and initiative tightening region watchers notified CNBC The weakness in the dollar comes as an added bonus Brendan McKenna international economist and foreign exchange strategist at Wells Fargo lists three reasons for the ruble s rally The central bank has opted to keep rates relatively elevated capital controls and other FX restrictions have tightened a bit and there s been chosen progress or attempt at progress in finding a peace between Russia and Ukraine Russia s central bank has maintained a restrictive stance to curtail high inflation keeping domestic interest rates high at and tightening credit The steep borrowing costs are deterring local businesses from importing goods in turn reducing demand for foreign currency among Russian businesses and consumers explained industry watchers There s been a decline in foreign currency demand from local importers given weak consumption stated Andrei Melaschenko an economist at Renaissance Capital That decline has given the ruble a boost as banks don t need to sell rubles to buy the dollar or yuan In the first quarter of there was an overstocking in consumer electronics cars and trucks which were actively imported in the second half of last year in anticipation of the increase in import duties commented the Moscow-based economist The consumer activity cooldown was primarily in the durable goods sector which made up a sizable portion of Russia s imports Melaschenko reported Further Russian exporters need to convert dollar payment into rubles thereby increasing the currency s demand Importers on the other hand have cut back purchasing foreign goods and so do not need to sell rubles to pay in dollars Russian exporters in particular the oil industry have been converting foreign earnings back into rubles analysts revealed The Russian administration requires large exporters to bring a portion of their foreign earnings back into the country and exchange them for rubles on the local realm according to the administration Between January and April the sales of foreign currencies by the largest exporters in Russia totaled billion figures from CBR proved This is almost a jump compared to the four months before January CBR shrinking money supply is also supporting ruble noted Steve Hanke professor of applied economics at Johns Hopkins University In August the rate of rise in the money created by the CBR was soaring at per year he commented This figure has turned negative since January in the present contracting at a rate of - per year explained Hanke Further hopes for a peace deal between Ukraine and Russia following the vote of U S President Donald Trump had also sparked several optimism noted Wells Fargo s McKenna Expectations of Russia s reintegration into the economic activity had prompted particular capital flows back into ruble-denominated assets in spite of the capital controls which have supported the currency s strength to various extent Is the rally sustainable Despite the ruble s current strength analysts caution that it may not be sustainable Oil prices a major pillar of Russia s export market system have fallen significantly this year which could weigh on FX inflows We believe that the ruble is close to its maximum and may begin to weaken in the near future Melaschenko explained Oil prices have fallen significantly which should be reflected in a decrease in export revenue and the sale of its foreign currency component he added While peace talks between Russia and Ukraine of late have not wielded any concrete developments McKenna also noted that a concrete peace deal could erode ruble s strength as the controls such as the FX restrictions that have supported the currency might be lifted Ruble can selloff pretty rapidly going forward especially if a peace or ceasefire is reached he stated In that scenario capital controls allegedly get fully lifted and the central bank might cut rates rather speedily he added Economic trade-offs Exporters are also seeing slimmer margins industry analysts noted in particular the country s oil sector against the backdrop of declining global oil prices The leadership too is feeling the squeeze lower oil prices combined with a stronger ruble are eroding oil and gas revenues The authorities s finances are highly sensitive to fluctuations in crude prices with oil and gas earnings making up around of federal revenues in according Heli Simola senior economist at the Bank of Finland The Ministry of Finance has been forced to lean more heavily on the National Welfare Fund to cover spending Melaschenko revealed And there may be further cuts to non-priority expenditures if this trend continues That revealed aside from the oil business Russia has been mostly isolated from the global marketplace Meaning a weaker RUB does not add much to Russia s exchange competitiveness explained McKenna