The ruble rose 6.3% to trade at 58.75 against the euro at 1:48 p.m. GMT on May 23. This is the strongest exchange rate of the Russian ruble against the euro since the beginning of June 2015, Reuters reported.
The ruble also increased by more than 4.6% against the USD to trade at 57.47. The ruble has gained about 30% against the US dollar this year despite the economic crisis in Russia.
According to Reuters, the ruble is being boosted by companies focused on exports Obligated to convert their foreign currency revenue after sanctions have frozen nearly half of Russia's gold and foreign exchange reserves.
Analysts from Tinkoff Investments said that while the central banks and the Russian government are responding to the sanctions, the ruble could continue to appreciate further in the medium term.
"Near the fall, the exchange rate could start to stabilize near 60-65 as imports recover and the restrictions are likely to be lifted," Tinkoff analysts said.
Meanwhile, Otkritie Bank experts said the ruble could stabilize at 55 against the USD within the previous month from 70-80 before the end of the year.
Russia's demand for foreign gas payment in rubles has also contributed to the recent rally in the Russian currency, analysts pointed out last week.
Foreign currency supply from exporters, high oil prices and the upcoming tax period at the end of the month often prompt companies to focus on exports to convert foreign exchange revenue into rubles to pay off domestic debts and all of this supports the Russian currency, BCS Express said in the report.
Vedomosti newspaper on May 23 quoted sources as saying that the Russian central bank has begun buying foreign currency to prevent the ruble from getting stronger uncontrollably.
The Russian central bank denied the news, stressing that "this information is not true to reality".
Promsvyazbank analysts pointed out that if the Russian central bank takes such intervention measures, the impact on the ruble exchange rate will be more noticeable. "However, such news could influence market participants' behavior and lead to a weakening of the ruble," the analysts noted.
Also reporting on the ruble rising to its highest level against the euro since July 2015, RT pointed out that many European customers are complying with opening foreign currency and ruble accounts with Gazprombank. According to Russian Deputy Prime Minister Alexander Novak, about half of Gazprom's more than 50 foreign customers have opened these accounts.
"The pressure on the US dollar and the euro will increase as more gas buyers open special accounts. It will not be a daily pressure - and the currency could fall back to around 59-60 rubles - but there will certainly be new waves of increase," said George Vaschenko, head of Russian stock market operations at freedom Finance.
Sberbank CIB exchange rate and foreign exchange expert Yuri Popov predicts that the ruble could reach 50 rubles per USD by the beginning of the third quarter.
