Biden administration insists Western sanctions on Russia are working, despite rebound Value in rubles against dollars.

A senior U.S. Treasury Department official told reporters that the government believes the real value of the ruble has been severely damaged, citing soaring inflation in Russia and the devaluation of the ruble on the black market.

The ruble traded at around $86 on the interbank market on Friday after plunging to $150 against the dollar in early March. Its current value against the dollar is not far from where it was on February 23, the day before Russian President Vladimir Putin launched an invasion of Ukraine.

However, the ruble is unable to function as a convertible currency after sanctions caused imports of goods and services to plummet, leaving businesses and consumers largely unable to buy products in international markets or travel abroad.

Economists have attributed the rebound in the interbank market to Moscow’s strict currency controls, which have prevented Russians from moving money into foreign bank accounts or taking large amounts of cash out of the country.

Moscow has also temporarily banned banks and brokers from operating cash-based foreign exchange transactions in dollars and euros.

The Treasury official noted that inflation in Russia has surged 6 percent in the past three weeks, while sanctions by Western central banks have kept the country from using half of its foreign exchange reserves, cutting off buffers it has built to soften the blow. channel. punitive measures.

Karl Schamotta, chief market strategist at Corpay, said: “The message content in the exchange rate right now is not the same as that of any other major economy. The fact is that we have created a one-way valve: money flows into Russia, but not out. This will force The exchange rate has risen over time,” he said.

“The black market is quoting between 110 and 140 for dollar/ruble transactions. So citizens looking to buy dollars or euros pay a lot more than we see in the interbank market.”

“Clearly, the sanctions that have been put in place have had an impact on the real economy, the non-energy, non-commodity economy, and there is a huge cost to households,” Schamotta added.

Treasury officials said in a conference call with reporters that the U.S. believes it still has the ability to expand sanctions in the future as the European Union continues to reduce its reliance on Russian energy imports and other raw materials.

The official said the U.S. sanctions were designed to maximize disruption of Russia’s military incursion into Ukraine while minimizing negative impacts on global supply chains, particularly the European Union.

It is therefore more important for the United States, the European Union and the United Kingdom to come together on sanctions, the official said, making it harder for Russia to circumvent restrictions than for Washington to take the harshest measures.