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Russia Inc is back in business: Rebound now visible as the ruble breaks below 70 to the dollar

Added 06-04-20 03:37:04am EST - “If Russia's plan was not to panic, keep its powder dry and wait for oil prices to recover, then that plan is working pretty well.” - Rt.com

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Posted By TheNewsCommenter: From Rt.com: “Russia Inc is back in business: Rebound now visible as the ruble breaks below 70 to the dollar”. Below is an excerpt from the article.

The ruble broke back below RUB70 to the dollar this week and was trading at RUB68.48 to the dollar as of the close of trading on June 3.

“The official exchange rate averaged RUB72.6/$ in May vs RUB75.4/$ in April, while the lowest levels were seen in late March-early April, when the ruble was trading around RUB79-80/$,” BCS Global Markets said in a note.

“A stronger ruble is an important factor for the inflation trend – the ruble’s appreciation slows import price growth and helps stabilize consumer inflation. Analysts see rising influence of other factors, for example, the deflationary effect coming from weak domestic demand,” BCS-GM’s note added.

As bne IntelliNews reported the ruble has performed remarkably well during this crisis, but it was badly wounded in the panic that followed the Kremlin’s decision to withdraw from the OPEC+ production-cut deal on March 6 falling as low as RUB80.8815 on March 24.

The ruble’s tether to the price of oil has been largely broken by the fiscal rule that mandates the Ministry of Finance to siphon off all revenues earned from oil exports above the price of $42 per barrel.

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