Dollar Collapses Against Russian Rouble for First Time in 4 Years

The Russian rouble rose to levels not seen since March 2018 against the dollar on Tuesday, boosted by export-focused companies selling foreign currencies to pay taxes and ignoring a slight easing of capital controls.

The rouble has appreciated nearly 30% against the dollar this year despite Russia's overall economic crisis, making it the world's best performing currency.

The Russian currency is being channeled through capital controls imposed in late February to protect Russia's financial sector after Moscow's decision to send troops to Ukraine prompted unprecedented Western sanctions.

"The rouble recorded 2.5% stronger against the dollar at 56.36, hovering around that level for the first time in more than four years, while against the euro, it rose 3% to 58.24, to 7-year high," according to Reuters.

"The sharp gains in the rouble are again due to the looming deadline tomorrow for the payment of 600 billion rubles ($10.43 billion) for mineral extraction taxes and the conversion of payments for gas exports into rubles," Sberbank said in a note.

"We believe the local currency may have trouble extending its recent rally, as selling activity among exporters may begin to decline."

The currency's strength has raised concerns about the negative impact on Russia's budget revenue from exports.

Russia on Monday reduced the proportion of foreign exchange earnings that exporters must convert into rubles to 50% from 80%.

Meantime, The rouble was weaker in banks. Sberbank, the largest bank in Russia, offered to sell dollars for 58.20 and euros for 60.38 roubles.