re: Latest Updates: Russia-Ukraine Conflict

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In light of all that, what do you make of the ruble's strength?

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BERAS: A serum known as capital controls - that's when a government or a central bank steps in to stop foreign capital - that's dollars and euros and yen - from flowing out of the country. And Elina says the capital controls adopted by the Kremlin took several forms.

RIBAKOVA: They more than doubled interest rate. And basically, they froze any dollars or euros you had in your bank account. It could have been any foreign bank or domestic bank. So you could no longer have access to it.

HIRSCH: The freeze extended to the ability of Russians to convert rubles into dollars.

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BERAS: Government also targeted foreign investors who wanted to cash out of Russia.

RIBAKOVA: So if you make a phone call, I would like to sell Russian stocks and get my money out, they would say, you know what? We're not picking up that phone call.

HIRSCH: These measures - doubling interest rates, freezing accounts and restricting trading - they're not unheard of, but they're highly unusual. I mean, freezing accounts is the kind of thing that countries in really dire economic straits have done in the past. Argentina in 2001 is a good example. They do it to keep as much foreign currency in the country as possible.

BERAS: And in this case, it worked. The dollars and the euros stopped flowing out of Russia, which meant that it did indeed have the foreign currency it needed to service its foreign debt. That put a floor under the ruble and stopped it falling.

HIRSCH: The Kremlin then gave itself a second dose of serum. It ordered all Russian countries doing business overseas and getting paid in foreign currency to convert 80% of those revenues into rubles. This, of course, created instant demand and jacked the ruble higher.

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A strong ruble hurts Russia by eating away at its income from oil and gas exports, which feeds into around 45% of its federal budget, according to the International Energy Agency.

Both those commodities are valued in dollars, or other non-ruble currencies, on international markets. So when Russia goes to convert its revenues back into rubles, to spend on things like pensions, a high exchange rate means it's losing money.

"From a budget perspective, the ruble's recent appreciation lowers dollar-linked, but ruble-denominated, oil and gas taxes," Dolgin said.

Russian policymakers are now scrambling to deliberately weaken the ruble. In July, the Bank of Russia slashed interest rates by 150 basis points to 8%, bringing them below pre-war levels.

"We're seeing the central bank cutting rates aggressively in an attempt to ease the pressure on the currency," Craig Erlam, a market analyst at foreign-exchange broker OANDA, told Insider.

Meanwhile, Moscow is reportedly considering a plan to spend up to $70 billion buying Chinese yuan and other "friendly" currencies, which it hopes will curb the ruble's rise.

But its ability to find foreign-exchange trading partners has been hampered significantly by Western sanctions, according to ING's Dolgin

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