The ruble is on the verge of recovering all the value it lost after the invasion of Ukraine

The ruble is making a strong comeback as peace talks progress, and is already on the verge of erasing all the losses it suffered in the weeks after Western sanctions invaded Ukraine, though it still has some way to go.

The currency has strengthened in 13 of the last 14 sessions, offsetting most of the 33% plunge it suffered after President Vladimir Putin decided to try to invade Ukraine. The ruble rose more than 4% on Tuesday to about 86 per dollar, approaching its pre-war level.

“The ruble rally has really been the result of the Russian Central Bank’s policies to force companies to sell their currencies, and limit dollar purchases,” said Natalie Rivett, senior emerging markets analyst at Informa Global Markets. “A ceasefire between Russia and Ukraine would probably help strengthen the ruble, but it’s hard to imagine a sustainable appreciation.”

Still, the dollar-ruble currency pair is just 6% away from recovering to 81.16 units per ‘greenback’, the level it closed on February 23, the day before Putin ordered his tanks to cross the border with Ukraine. Regaining – and maintaining – that figure would be a challenge given the sanctions imposed by Western countries against Russian trade and economy, Rivett said.

Guillaume Tresca, senior emerging markets strategist at Generali Insurance Asset Management, echoed the persistent risk in the currency, which is not found in a typical functional market. Capital controls imposed by the central bank, to prevent massive currency outflows, have given some support to the ruble. Putin’s order – still to be clarified – that natural gas sales be made in rubles would also have helped, although the G-7 has rejected that requirement, which would mean breaking the contracts already signed.

“The strengthening of the ruble should be taken with a grain of salt,” Tresca believes. “The recovery is fragile, driven more by technical factors than any real economic improvement.”