Russian rouble surges after release of Marc Fogel

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The rouble surged to its strongest level against the US dollar in five months on Wednesday as the release of an American teacher held in Russia bolstered investors’ hopes of an end to the war in Ukraine.

The currency jumped nearly 3 per cent on Wednesday to 93.8 to the dollar, following the deal to secure the return of Marc Fogel, who had been detained since 2021.

The move extends a rally sparked by Donald Trump’s return to the White House, with the rouble gaining 21 per cent since the start of the year. The US president has promised to bring the Ukraine war to an end, and the White House said Fogel’s release was a move “in the right direction” in ending the conflict.

Kremlin spokesperson Dmitry Peskov said the deal was the result of “intensified” contact with the White House, adding that a Russian prisoner detained in the US would be released in exchange. 

“The expectation of negotiations between Russia and the US over Ukraine gives some optimism to investors,” said Alexandra Prokopenko, a fellow at the Carnegie Russia Eurasia Center in Berlin. 

“If the talks turn out complicated, and this optimism fades, the rouble will have a more difficult time.” 

Analysts said the currency had also been boosted by increased sales of the Chinese renminbi — Russia’s most traded foreign currency — by the Russian central bank, which intervenes in markets to support the exchange rate. 

Rising energy prices have also supported the rouble by boosting Russia’s export revenues. Brent crude, the international oil benchmark is up 7 per cent since early December, while natural gas prices have risen more sharply.

The rouble plummeted to record lows following Russia’s invasion of Ukraine in 2022, which prompted a number of western sanctions in effect cutting Russia off from the global financial system.

Although authorities steadied the exchange rate by tightening currency controls, the rouble has remained volatile and was hit by further US energy sanctions late last year.