Hi guys! While enjoying a cup of coffee, suddenly you hear exciting news: The Russian Ruble (Russia’s currency) is incredibly strong, even more “skilled” than Gold! Yet, Gold is usually the superhero when the economy is under stress.
Now, this is what’s interesting. How can the currency of a country facing numerous sanctions be so “cheeky” and defeat Gold? Let’s break down the secret behind its strength!
The ‘Gold’ Power-Up of the Russian Ruble (Commodity Strength)!
Imagine this: The price of Gold rises because everyone is panicking and rushing to exchange their paper money for a safer asset (Gold). Russia sees this as an opportunity.
Russia is a huge producer of commodities, especially Oil, Gas, and Gold itself. They once said (and there are strong rumors it has been implemented) that they would “peg” (a kind of guarantee) the value of their russian ruble to Gold.
The message to the world: “My Ruble is not just paper, it is backed by real gold and energy! If you want my gas, pay with the Ruble!”
When they did this, many countries that need Russian energy were forced to hold the russian ruble. This automatically caused the demand for the Ruble to soar drastically. So, the Ruble is strong not just because the market is panicking (like gold), but because there is real demand from energy buyers!
The Russian Ruble and The ‘Strict Banker’: The Central Bank of Russia!
This is the ultimate and most killer move. The Central Bank of Russia acts super disciplined, like a parent who is very strict in managing their child’s pocket money:
Super High Interest Rates (To Encourage Saving)
They raised the bank interest rates to a very high level. The objectives:
- It makes people reluctant to borrow to buy imported goods.
- It makes people happy to save in the russian ruble because the interest is huge.
When people are reluctant to buy imported goods, the demand for the Dollar or other foreign currencies to pay for imports decreases.
‘Mandatory Dollar Exchange’ Rule (Flooding the Market with Rubles)
This is the most accurate move. The government obligates all large companies (especially those selling oil and gas) to MANDATORILY EXCHANGE most of their export earnings (Dollars) into the russian ruble.
The Impact: Every day, there is a lot of Dollar flowing into Russia from oil sales. This Dollar is FORCED to become the Ruble. Automatically, the russian ruble market is flooded with money, and its value becomes incredibly strong!
Why Did Imports Decline? (The Barrier Wall)
Due to sanctions from the West and the high interest rates mentioned earlier, the volume of imported goods entering Russia became small.
Simple Logic: If imported goods are few, Russia’s need to buy Dollars/Euros to pay for imports is also small.
Result: Foreign currency from exports is plentiful, the demand for foreign currency for imports is minimal. This balance causes the Russian Ruble to continue its dominance!
The Ruble in the Eyes of the Rupiah: Russian Ruble to IDR
Then, for us in Indonesia, how important is it to know this?
When you check the russian ruble to idr exchange rate, you will see the numbers moving. The strong exchange rate of the russian ruble shows that they are currently skilled at managing their economic ‘fence’.
Essentially, the rise in the value of the russian ruble is not a miracle, but the result of a smart strategy that combines:
- The strength of natural resources (Gold & Energy).
- Strict Central Bank discipline (High Interest Rates & Capital Control).
So, don’t be surprised if the Ruble is currently flexing its muscles in the face of Gold. It’s all about rules and resources! Isn’t that cool?
Read also: 10 Most Beautiful Currencies in the World That Look Like Art
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Well, are you now more enlightened about the Russian Ruble? So, if there is news about the movement of the Russian Ruble, you will already understand the background conditions behind it and can be wiser and more selective in exchanging money.
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