Russian rouble slides to more than three-week low vs dollar

It is the world's strongest-performing currency so far this year



File photo
File photo

By Reuters

Published: Mon 1 Aug 2022, 12:45 PM

On Monday, the rouble slid to a more than three-week low against the dollar in Moscow trade, as oil prices fell, and after the Russian currency lost the support of a favourable month-end tax period.

At 0729 GMT, the rouble was 1.1 per cent weaker against the dollar at 62.30, having earlier touched 62.4875, its weakest point since July 7. It had lost 1.9 per cent to trade at 63.66 versus the euro.

High oil prices and a strong current account surplus stemmed some losses last week, but the rouble still lost around 7 per cent to the greenback.

"The rouble weakened steadily due to the end of the tax and dividend period," said Dmitry Polevoy, head of investment at Locko Invest.

The tax payment period, which usually sees exporting firms convert foreign currency revenues to pay local liabilities, ended last week.

Polevoy said it was quite possible that the rouble could soon weaken temporarily to 63-65 against the dollar.

The market is also anticipating news that the government will soon tweak and reinstate Russia's budget rule that diverts excess oil revenues into its rainy-day fund with a new cut-off price. Officials may also turn to currency interventions, in order to try and curb the rouble's strengthening.

The rouble is the world's strongest-performing currency so far this year, boosted by measures to shield Russia's financial system from Western sanctions imposed after Moscow sent troops into Ukraine on February 24.These include restrictions on Russian households withdrawing foreign currency savings.

Brent crude oil, a global benchmark for Russia's main export, was down 0.5 per cent at $103.4 a barrel, falling from early July highs struck last week.

Oil prices under pressure will impact the rouble, said Promsvyazbank analysts, suggesting a trading range for Monday of 61-63 against the dollar.

Russian stock indexes were falling. The dollar-denominated RTS index was down 1.5 per cent to 1,112.9 points, while the rouble-based MOEX Russian index was 0.6 per cent lower at 2,200.9 points.

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