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Russia’s ruble traded close to pre-war levels against Bitcoin (BTC) after the central bank recently pegged the falling currency against gold. The ruble had slumped to record lows against BTC in the wake of strict economic sanctions against Russia.
The ruble is trading at 3.4 million against BTC, after crashing all the way to over 5.2 million in March. It is now closer to pre-war levels of 2.9 million than it is to its lifetime lows. The recovery also follows a sharp bounce-back in ruble rates against the U.S. dollar.
Ruble pegged to gold
Russia’s central bank pegged the ruble to gold in order to stabilize the currency, which was otherwise in freefall. Strict economic sanctions from western countries have effectively cut Russia off from a bulk of the global financial system, and bled its foreign exchange reserves dry.
The United States and its allies imposed a host of strict sanctions on Moscow after Russian troops invaded parts of eastern Ukraine in February. A recent escalation in military tensions saw even more sanctions being imposed on Russia.
As such, the central bank began buying gold at fixed rates, and also imposed strict capital controls to support the currency. But even while the currency appears to have recovered, Russia faces economic devastation this year due to the sanctions.
Speculation has been rife over whether the country will turn to cryptocurrencies to help reduce its economic woes.
Is crypto an option for Russia?
Several Russian ministers have been observed touting crypto adoption to support the economy. While the government is largely against adopting crypto as legal tender, it sees potential in developing Russia’s mining capabilities.
The Russian Finance Ministry recently said a proposed crypto bill would pay “special attention” to mining. An energy minister was also quoted saying Moscow could begin accepting Bitcoin for its gas exports.
But while crypto will likely help Russia avoid some economic ructions, the country still faces bigger problems due to the sanctions. Export blacklists have seen it cut off from several major sources of technology, such as Taiwan. Most western companies have also cut their Russian operations.
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