The Russian ruble experienced a decline below the symbolic 100-to-the-dollar threshold before showing a slight recovery in early Tuesday trading. This depreciation was attributed to foreign currency outflows and a reduction in the country’s current account surplus.
In August, the ruble had previously fallen into triple digits, prompting the Bank of Russia to implement an emergency interest rate hike of 350 basis points to 12%. Additionally, discussions were held about reinstating currency controls to support the ruble.
As of 0605 GMT, the ruble was trading 0.4% weaker against the dollar at 99.41, reaching as low as 100.2550 during early trading, marking its lowest point in over seven weeks. On the other hand, it had strengthened by 0.8% against the euro, trading at 104.11, and gained 0.3% against the yuan, reaching 13.56.
Brent crude oil, a key global benchmark for Russia’s exports, saw a 1.1% decrease, reaching $89.70 per barrel, its lowest level in nearly a month, though still above its 2023 average.
At the beginning of each month, the Russian ruble typically faces pressure due to the absence of the supportive month-end tax period, during which exporters typically convert foreign exchange revenues to meet local obligations.
Promsvyazbank analysts noted that while expensive oil and a higher key interest rate are positive factors for the ruble’s outlook in the medium term, they expected the ruble to briefly exceed the 100-to-the-dollar mark unless the authorities introduced new support measures.
As the ruble slid to 101.75 per dollar in August, President Vladimir Putin’s economic advisor criticized the central bank, attributing the decline to its loose policy stance and indicating growing internal discord.
Following the emergency rate hike in August, the central bank raised interest rates again in September to 13%. Given the persistent inflationary pressures, analysts surveyed by Reuters anticipate further monetary policy tightening at the next central bank meeting on October 27.
The ruble’s value has experienced a turbulent trajectory since Russia invaded Ukraine in February 2022. It reached a record low of 120 against the dollar in March of the same year before rebounding to its highest level in over seven years, supported by capital controls and increased export revenue. However, declining exports, influenced by Western sanctions, changing trade patterns, and increased imports this year have led to the ruble’s depreciation. Russia’s current account surplus shrank by 86% year-on-year to $25.6 billion in the period from January to August.