Russian Rouble Strengthens After Slump Against Dollar
The Russian rouble showed signs of recovery on Friday, bouncing back from a seven-week low against the dollar. This decline was attributed to lower oil prices and reduced foreign currency supply from exporters at the beginning of the month.
By 0927 GMT, the rouble had strengthened by 0.3% against the dollar, reaching a rate of 100.13. Earlier in the day, it had touched 101.50, the weakest level since August 14. Meanwhile, it had gained 0.2% against the euro, trading at 105.60, and firmed 0.3% against the yuan, reaching 13.69.
Factors Influencing the Rouble’s Performance
The rouble’s previous descent into triple digits in August prompted the Bank of Russia to implement an emergency 350 basis-point rate hike to 12%. However, this time around, interventions to support the currency have been more limited.
The Kremlin expressed no concerns regarding the rouble’s weakening. President Vladimir Putin acknowledged the issue but also emphasized the economy’s resilience against Western sanctions imposed due to Russia’s invasion of Ukraine.
Inflation has been accelerating, reaching 5.94% on October 2 according to the economy ministry. As a result, there is widespread anticipation that the central bank will raise rates from the current 13% at its upcoming meeting.
Causes of the Rouble’s Weakness
Analysts at Promsvyazbank attribute the rouble’s weakness to delayed action by the authorities and Russia’s trade imbalance, with exports contracting while imports have seen a sharp recovery. They expect the currency’s entry into the three-digit zone to be short-lived and predict that measures will be taken to cool the foreign exchange market.
Gazprombank Investments suggests that reimposing a requirement for exporters to sell a portion of their foreign exchange revenues could strengthen the rouble. However, this measure may hinder Russian businesses’ investment plans.
Oil prices, a global benchmark for Russia’s main export, were down 0.1% at $84.02 a barrel, near their lowest level since late August.
Russia’s government announced on Friday that it had lifted a ban on pipeline diesel exports via ports, removing the majority of restrictions implemented on September 21.
These restrictions on fuel exports from Russia, the world’s top seaborne exporter of fuel, have bolstered global prices and led some buyers to seek alternative sources of gasoline and diesel.
Stock Market Performance
Russian stock indexes experienced mixed results. The dollar-denominated RTS index rose 0.1% to 983.1 points, after hitting a three-month low earlier. Meanwhile, the rouble-based MOEX Russian index dropped 0.2% to 3,124.6 points.
