Commentary  The Russian central bank recently announced that it will stop buying gold at a fixed rate and will instead buy it at the negotiated rate from banks. Following the numerous sanctions imposed on Russia, the ruble had fallen tremendously against the U.S. dollar, to get out of such a situation it had announced that it would buy gold at a fixed price of 5,000 rubles a gram until June 30.
Since that announcement, the ruble has strengthened sharply against the dollar for over one month. Five-thousand rubles were worth around $52 on March 25 and around $63 on Thursday.
The mechanism which led to the increase was to allow the markets to play themselves out, in order to combat sanctions, they asked the nations to transact in their currency which, due to the extensive and growing array of sanctions by the western front, was becoming devalued by each day. It was here, by demanding payment in rubles, are attempting to increase demand for their currency which led to its increase where being pegged to hard currency allowed the confidence of the markets to increase so the ruble wasn’t dumped extensively.
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