Oct 3, 2023: The Russian rouble weakened past the symbolic threshold of 100 to the dollar before recovering slightly in early trade on Tuesday, weighed down by foreign currency outflows and the country’s shrinking current account surplus.
The rouble’s last tumble into triple digits in August led the Bank of Russia to make an emergency 350-basis-point rate hike to 12% and authorities discussed reintroducing controls to buttress the currency.
At 0415 GMT, the rouble was 0.21% weaker against the dollar at 99.97 after falling to as low as 100.26 soon after opening at 0400 GMT.
It had gained 0.33% to trade at 104.61 versus the euro. It had shed 0.28% against the yuan to 13.65.
The Russian currency tends to come under pressure at the start of each month, after losing the support of a favourable month-end tax period that usually sees exporters convert FX revenues to meet local liabilities.
President Vladimir Putin’s economic adviser rebuked the central bank as the rouble slid to 101.75 per dollar in August, blaming its loose policy in a sign of growing internal discord.
Following the August emergency hike, the central bank raised rates again in September to 13%. Analysts polled by Reuters expect the central bank, also grappling with stubborn inflationary pressure, to tighten monetary policy again at its next scheduled meeting on Oct. 27.
The rouble has charted a turbulent course since Russia invaded Ukraine in February 2022, slumping to a record low of 120 against the dollar in March last year before recovering to a more than seven-year high a few months later, supported by capital controls and surging export revenue.
Falling exports, hit by Western sanctions and shifting trade flows, combined with a recovery in imports this year has caused the rouble to weaken. Russia’s current account surplus shrank 86% year-on-year to $25.6 billion in January-August.
Source Courtesy: Reuters