A few weeks ago, the Russian currency was tanking under pressure from international sanctions, but the ruble is back. At least on paper, its value has recovered. This lets Russia avert a currency crisis and limits domestic inflation. It means Russia can more easily pay its debts, theoretically.  

At one point, a ruble was worth a fraction of an American penny. Now, it’s worth a little more than a whole one.

“The ruble is nearly back to where it was pre-crisis,” said Elina Ribakova, the deputy chief economist at the Institute of International Finance. Part of what’s holding up the ruble is demand for it.

“Russia exports mostly commodities. The biggest share of them is oil and gas, and Russia continues to export them,” Ribakova said.

Buying natural gas from Russia requires rubles. Not only that, Russia has manufactured additional demand by requiring Russian companies to convert most of their profits from abroad into rubles. It’s also made it very difficult for anyone with rubles in Russia to sell them.

With anything that can be bought and sold, if you prop up demand and smother supply, the value goes up. 

“It’s almost like the ruble has synthetically returned,” said Simon Harvey, head of foreign exchange analysis for Monex Europe and Canada.

There may be, technically, a price for the ruble, but the market is barely functioning. Basically, just because the store puts up an ad in the window doesn’t mean there’s much inside, Harvey said.

“You’re walking into the store. You see a TV for $10, but there’s not one on the shelf,” he said.

Russia can keep its currency propped up for as long as it exports oil and gas and continues to trap its rubles inside Russia. 

This doesn’t mean that sanctions, which were imposed by Western nations after Russia’s invasion of Ukraine, have no effect, according to Friedrich Heinemann, an economist at the think tank ZEW.

“I mean, you can have a very tough recession, even with a stable currency,” he said. “The economy is going through a very deep recession. The forecasts are the Russian economy may contract by something like 10%.”

The Institute of International Finance predicts that Russia’s economy will contract by even more, 15%. Still, Russia has a lifeline in its exports. As long as it does, it may be able to manipulate supply and demand for its currency and keep it stable.