Russian rouble falls to 70 against US dollar as sanctions bite

It remains the world's best-performing major currency against the greenback this year, supported by capital controls and reduced exports

Rouble banknotes. The Russian currency is on track for a monthly decline after an oil embargo and price cap came into force. Reuters
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The Russian rouble weakened on Tuesday, struggling to consolidate a slight recovery from last week's slide as the market comes to terms with the prospect of lower export revenue amid restrictions on Russian oil.

The rouble lost about 8 per cent against the dollar last week and is on course for a monthly decline after an oil embargo and price cap came into force.

Russia's Finance Ministry has said the recent slump was related to recovering imports.

At the rouble was 1.2 per cent weaker against the dollar at 70.10 at 7.42am GMT, but still some way off the almost eight-month low of 72.63 struck last week.

“At the end of December, the rouble is likely to remain extremely volatile as the market will need to find a new equilibrium under changed trade flows and increased sanctions pressure,” BCS World of Investments said in a note.

“This week, the rouble is expected to fluctuate in the range of 68-71 [per dollar].”

Against the euro, the rouble lost 1.1 per cent to 74.35. Against the yuan, it was down 1.9 per cent at 9.95.

The rouble remains the world's best-performing major currency against the dollar this year, supported by capital controls and reduced imports.

Now, with exports and revenue falling, a weaker rouble is more beneficial, the Tass news agency quoted First Deputy Prime Minister Andrei Belousov as saying on Tuesday.

“The strong rouble has played its role,” Mr Belousov said. “In these conditions … it would be good to have a rouble rate of 70 to 80 per dollar.”

Brent crude, a global benchmark for Russia's main export, was up 0.4 per cent at $84.20 a barrel while Russian stock indexes were mixed.

The dollar-denominated RTS index was down 1.6 per cent at 961.3 points.

The rouble-based MOEX Russian index was unchanged at 2,139.5 points after touching its highest in about two weeks in early trade.

Updated: December 27, 2022, 1:47 PM