• The Russian ruble is the best performing currency in the world in 2022, rising 11% against the dollar.

• Amid wartime sanctions, Moscow imposed capital controls to prop up its economy and currency.

• But traders are about to stop using the onshore exchange rate for some transactions.

The Russian ruble has become the world’s best-performing currency this year, with its onshore rate rising more than 11% against the US dollar so far in 2022.

The ruble is the biggest gainer among 31 major currencies, according to data tracked by Bloomberg, and has overtaken the Brazilian real, which is up 9% this year.

But the ruble’s advance came after Moscow imposed a series of capital controls to prop up the economy to offset Western sanctions for its war on Ukraine. This means that few investors are able to reap the benefits of Russia’s rising currency.

Capital controls add to the fact that Russia demands payments in rubles for the supply of natural gas to European countries, as well as forcing exporters to sell foreign currency assets.

Nonetheless, the success of the Kremlin’s artificial market maneuvers has surpassed those of other nations like Argentina and Turkey when they have attempted similar measures.

But forex traders are set to stop using the onshore exchange rate for some transactions, as tight capital controls have produced a wider spread against the offshore ruble rate.

Starting June 6, the Trade Association for the Emerging Markets recommended traders use the WM/Refinitiv rate to settle certain derivative contracts, according to an April 20 statement reported by Bloomberg.

Read the original article at Business Intern