Ruble at 7-week low against USD

The ruble price fell to 100 rubles per dollar this afternoon, reaching this important psychological level for the first time since mid-August.

Earlier this afternoon, the Russian currency fell to 100.25 rubles per dollar, a seven-week low. It has now rebounded to 99.58 rubles per dollar.

The ruble also rose 0.6% against the euro and was stable against the yuan. One euro is now worth 104.2 rubles. One yuan is worth 13 rubles.

The last time the ruble breached the 100 mark, the Russian Central Bank had to raise its key interest rate by 350 basis points (3.5%) to 12%. Officials also discussed reimposing capital controls to support the currency.

"The 100 mark is not a technical resistance. It is an important psychological barrier. Right now, all predictions are that the ruble will lose value," said Alexei Antonov, an analyst at Alor Broker.

The ruble has been steadily weakening against the US dollar over the past year. Chart: Reuters

The ruble is usually under pressure at the beginning of the month, as the end of the month is when exporters convert foreign currency earnings into local currency to pay taxes.

“Rising oil prices and higher interest rates will improve the outlook for the ruble in the medium term,” analysts at Promsvyazbank said, predicting the ruble will continue to breach the 100-per-dollar level if authorities do not introduce new support measures.

Last month, the Russian Central Bank raised its benchmark interest rate to 13%. With inflationary pressures still high, the central bank is likely to tighten policy further at its next meeting on October 27, according to a Reuters survey.

The ruble has been volatile since the Russia-Ukraine conflict broke out in February 2022. Last March, the ruble hit a record low of 120 rubles to the US dollar. But just a few months later, the currency reached a seven-year high against the ISD, thanks to capital controls and soaring Russian export revenues.

This year, falling exports (partly due to Western sanctions and a reorientation of global trade flows) and a rebound in imports have weakened the ruble. The current account surplus in the first eight months of the year also fell 86% from the same period last year to $25.6 billion.

Ha Thu (according to Reuters)

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