According to Sofya Donets, chief economist for Russia at Renaissance Capital, the answer lies in an unprecedented trade surplus.
“Imports to Russia have declined, while exports are strong, and with high hydrocarbon prices, this gives an estimated trade surplus of $20-25 billion in March.”a record according to the economist.
Oil and gas, Russia’s main exports, continue to flow, filling Russia’s coffers.
“Certainly, Russian oil (Urals) is selling at a lower price” than Brent, “but it remains higher than the price of 2021”she remarks.
However, announcements have been made. Washington has thus decreed an embargo on Russian oil, the EU a ban on the metals sectors.
“These are loud announcements, but if you look at the numbers, it only concerns 5% of Russian exports”note Sofya Donets.
As long as Europe, the first buyer of Russian hydrocarbons, continues its purchases, significant revenues are guaranteed to Moscow.
Robust exports are complemented by draconian capital controls introduced by the Central Bank. The latter was indeed hit with unexpected sanctions: its foreign currency reserves held abroad, nearly 300 billion dollars, were frozen.
However, it is this windfall that it traditionally used to defend the Russian currency in the event of a hard blow.
To compensate, all exporting companies were forced to sell 80% of their export earnings to buy rubles. Individuals have been limited to 10,000 dollars purchased per month and one cannot leave the territory with more than this sum. With most international transfers blocked, and foreigners banned from selling their Russian assets, the financial market finds itself in a vacuum.
