Nervous ruble tumbles against dollar as sanctions fears erode domestic FX confidence

The Russian ruble pared its early gains to weaken against the dollar in volatile trading on Monday, but surged against the euro amid limited liquidity and as investors feared new sanctions could limit their ability to trade foreign currency in Moscow. Russian markets are expecting more sanctions after President Vladimir Putin signed treaties annexing four Ukrainian regions last week, a move by Western and Kyiv governments that violates international law.

At 2:44 p.m. GMT, the ruble was 1% weaker against the dollar at 59.05, hitting 59.65, its weakest point since September 23. It had traded below 57 earlier in the session. On Friday, the ruble hit its highest level since July 1 against the greenback and a nearly eight-year high against the euro.

“To say the ruble was volatile on Friday would be an understatement,” said Dmitry Polevoy, chief investment officer at Locko Invest. “56.90 at breakfast, 53.20 at lunch and almost 58.45 at dinner.” With the conclusion of last week’s month-end fiscal period which typically sees export-focused companies convert foreign exchange earnings into rubles to pay local debts, Polevoy said there should be no strengthening of the level observed on Friday.

The ruble gained 2.8% to trade at 55.09 against the euro, after hitting 50.7250 on Friday. It was up 0.6% against the yuan at 8.291. A trader from a major Russian bank said there was a complete lack of liquidity when it came to the euro.

“To issue a real volume of foreign currency more or less in the current environment and not break the market, you have to fill the order book in very small portions and often,” said the trader. “If you can’t do that, you’re seeing biased quotes.” Russian stock indices were higher, but remain very sensitive to geopolitics.

“For the Russian market, geopolitical risk remains on the agenda after Gazprom suspended gas deliveries to Italy over the weekend, in what appears to be the latest iteration of Moscow’s dispute with the EU. on natural gas supply,” Alfa Bank said. in a note. The dollar-denominated RTS index rose 4.2% to 1,982.1 points. Russia’s ruble-based MOEX index rose 2.9% to 1,077.4 points.

Russian manufacturing activity grew at its fastest pace in 3.5 years in September, driven by higher production, new orders and customer demand, a business survey showed on Monday, although Western sanctions continue to weigh on export activities.

(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)

Comments are closed.