If the sanctions levied against Russia by the Biden administration aren’t actually damaging Putin’s economy – or their currency – then it seems the only people affected are average American citizens.

While the Biden administration continues to blame “Putin’s Price Hike” on historic levels of inflation, one would assume similar economic insecurity was impacting Russia, especially since most of the developed world is against their war efforts.

But no.

The Russian Ruble is up in value, growing competitive with the U.S. dollar.

The ruble is up a whopping 35% this year against the U.S. dollar and is trading at 55.78 to the dollar. That comes after the value of the ruble cratered following Russia’s invasion of Ukraine and was at one point worth less than a penny.

After Russia invaded Ukraine in February, the U.S. and European Union responded quickly with economic sanctions designed to crush the value of the ruble and send inflation soaring, a tactic similar to U.S. policy in Iran. The West had hoped the pressure would be enough to push Russian strongman Vladimir Putin to back out of the war, but the ruble has proved buoyant, and Putin has proven resistant.

The ruble is now the best performer against the greenback since the start of the year, despite Russian economic growth moving in the opposite direction.

After the invasion, Russia’s central bank imposed strict capital controls to force buying of the ruble and limit selling, including requiring Russian exporters to convert a percentage of their excess revenues into rubles.

Another factor pushing up the value of the ruble is soaring global energy prices. Since the war began, oil and gas prices have exploded as outflows from Russia have slowed.

Brent crude, the global oil benchmark, was at $114 a barrel on Monday morning, while the U.S. benchmark, West Texas Intermediate is now at $110 — a big increase from the $75 it was at the start of the year.

Russia has forced some foreign purchasers of its energy products to pay in rubles, something that has helped bolster the currency’s strength globally. Moscow is now seeing its revenue from energy exports pushing $20 billion per month, even as European importers work to cut dependence on Russian oil and gas, according to CBS News.

“Commodity prices are currently sky-high, and even though there is a drop in the volume of Russian exports due to embargoes and sanctioning, the increase in commodity prices more than compensates for these drops,” said Tatiana Orlova, lead emerging markets economist at Oxford Economics.

The ruble is so strong, in fact, that Russian officials are now trying to weaken it. First Deputy Prime Minister Andrey Belousov said there have been discussions about targeting an “optimal” exchange rate of 70-80 rubles per dollar in order to encourage economic growth, Bloomberg reported.

Russia has also worked to weaken the capital controls it implemented after the U.S. and Europe hit its economy with sanctions. The Russian central bank quickly hiked interest rates from 9.5% to 20% in the immediate aftermath of the invasion, but since then, it has slashed rates, which are now back at pre-war levels.

Meanwhile, despite the sanctions and international condemnation, Russia continues on its mission to restore its Soviet-era influence.

Author: Sebastian Hayworth