On Friday, trading in Moscow saw the Russian rouble strengthen past the 62 mark against the US dollar, but there was a sharp decline in shares of Yandexafter a new package of sanctions was introduced by the European Union against Russia. This is now the six package of sanctions to be introduced because of the Russian invasion of Ukraine that it launched on February 24^th this year. The latest package shows that all Russian seaborne petroleum products and crude oil will be subject to an import ban in the coming six to eight months.

Even though the development was a negative one, the Russian rouble strengthen, as it continues to perform well, thanks to the capital controls that had been implemented in the country for protecting its financial system. Russia had done so after it dispatched its troops for launching the so-called ‘special military operation’. The rouble had strengthened almost 0.3% against the greenback by 1405 GMT at a value of 61.55, while it strengthened against the euro by 0.6% to trade at 65.11. This year has seen the rouble become the best performing currency globally, as capital controls gave it an artificial boost and it also received support from key Russian exports like commodities, thanks to their high prices.

The Russian currency has also done well due to the new payment terms that were developed for gas consumers in the European Union. As per these payment terms, consumers would now be required to convert their currencies into roubles first. Russian imports have also declined and this has given the country’s currency yet another boost, allowing it to handle the economic challenges at home, along with the possibility of a default on external debt. According to the Kremlin and Gazprom, most gas payments became due in May.

It further added that French, Italian and German companies were willing to use the new scheme where the final payment would be made in roubles. However, companies in Finland, Poland, Bulgaria, the Netherlands and Denmark had refused to comply with the new payment terms, so they were cut off. With less gas buyers willing to convert their currencies into roubles to pay for gas, the euro was able to strengthen against the US dollar and roubles alike. This indicates that the Russian rouble could have found the right balance in demand and supply against the US dollar as well as the euro.

Analysts said that the rouble had struck a good balance and was likely to continue trading at a value between 61 and 62 against the dollar. The stock indexes in Russia fell. 2% losses were recorded in the RTS index, which is dollar-dominated, as it fell to 1,172.9 points. The MOEX index, which is based in roubles, also fell by 2% to reach 2,293.3 points. Shares of the internet giant Yandex fell by almost 6%, as sanctions drove ArkadyVolozh to leave the board and step down as CEO of the company. Back in November, shares of Yandex had reached a record high.