The ruble has spent the second half of the year in a free fall, on the back of sanctions and plunging oil prices. The situation got so bad that the Central Bank of Russia had to essentially give up using its foreign exchange reserves to prop up the currency, relying instead on a rash of steep interest rate hikes. Things are grim, and the Russian economy contracted last quarter for the first time in five years.
But Tuesday saw a brief rally, with the ruble up 8.6% in the second-biggest daily gain of the year (the biggest came after the latest rate hike). A Reuters story points to state companies selling their foreign cash hoards into a thin market:
Analysts at Nordea Bank said the early surge was probably driven by forex sales by one of Russia’s state exporters, which were recently ordered to sell part of their overseas revenues to support the rouble.
A Finance Ministry official was unable to immediately say whether the ministry had sold foreign currency left over on its accounts on Tuesday.