HomeForexRouble hits lowest level in 7 weeks as Putin addresses concerns

Rouble hits lowest level in 7 weeks as Putin addresses concerns

The Russian Rouble Weakens as President Putin Speaks

By Alexander Marrow

The Russian rouble has weakened against the dollar, falling to a more than seven-week low, as President Vladimir Putin addressed the nation. The decline in the rouble is primarily due to reduced foreign currency supply from exporters earlier in the month.

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Initially stable, the rouble began to slide as Putin delivered a speech in Sochi. In his address, he criticized the United States for attempting to impose its crumbling hegemony on the world and argued that the war in Ukraine highlighted the West’s detachment from reality.

By 1535 GMT, the rouble had weakened by 0.7% against the dollar, reaching 100.30, its lowest point since August 14. Against the euro, it had lost 0.9% to trade at 105.66, and it had also shed 0.5% against the yuan, reaching 13.70.

One factor contributing to the rouble’s decline is the absence of support from the favorable month-end tax period, during which exporters typically convert foreign exchange revenues to meet their local liabilities.

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Furthermore, the global benchmark for Russia’s main export, Brent crude oil, has fallen by 1.9% to $84.21 a barrel, hitting a more than five-week low. This drop in oil prices could further pressure the rouble, according to Banki.ru chief analyst Bogdan Zvarich. However, it is important to note that oil prices remain higher than they have been for most of this year.

Russia’s oil and gas revenues saw a rise in September, driven by higher oil prices and the country’s ability to find new export destinations after Western price caps and an embargo on seaborne oil exports constrained energy revenues.

It is expected that energy revenues will continue to recover in October due to tax changes and high commodity prices. The finance ministry anticipates a rise in tax revenues from the sector during October, which could provide strong support for the rouble. This is because oil companies would be compelled to increase the sales of their foreign currency export earnings. However, this support is likely to occur either in the second half of the month or when the exchange rate exceeds 100 roubles per dollar, as stated by Alexei Antonov, an analyst at Alor Broker.

The Russian stock indexes have also been affected, with the dollar-denominated RTS index falling by 0.8% to 983.8 points and the rouble-based MOEX Russian index remaining unchanged at 3,132.9 points.

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