Russian Ruble Drops Again As Volatile Trading Continues

Russian Ruble Drops Again As Volatile Trading Continues

December 30, 2022 0 By Wiley McDermott

On Wednesday, there was a sharp decline in the Russian ruble, as it dropped to a value of 72 against the US dollar.

The Russian currency has found itself under pressure lately because of the sanctions imposed on Russian oil, which are going to have an impact on the country’s export revenues.

Ruble falls

There was an almost 8% drop in the value of the Russian ruble last week against the US dollar and the Russian fiat is on course to record its biggest decline in a month after a price cap on its oil and an embargo went into effect.

However, the Russian finmin has claimed that the recent decline is because the country’s imports have begun their recovery.

There was a 2.2% drop in the Russian ruble by 1256 GMT against the US dollar, as it reached 71.93. The currency had reached 72.09 earlier.

It was now on course to reach its lowest value in eight months at 72.6325, which it had reached in the previous week.

The ruble also dropped 1.8% against the euro to reach 76.36 and declined against the yuan by 2.3% to reach 10.31.

The volatility

The last two weeks have seen the Russian currency experience a great deal of volatility and sharp swings in its price are expected because the trading volumes decline in the run-up to the New Year holidays in Russia.

Market analysts said that the recent decline in energy prices have occurred due to Western sanctions and this has put the ruble under a lot of pressure.

However, they also added that it is likely to be resilient down the road because oil prices are expected to go up once more because of geopolitics.

In addition, it is also likely that market fundamentals will drive OPEC+ to reduce their oil production, so Russian oil will continue to see demand.

There was a 0.4% drop in brent crude oil, which is considered the global benchmark for the main export of the Russian nation.

Russia’s response

On Tuesday, Russian President Vladimir Putin finally delivered the country’s response to the price cap imposed on its oil by Western nations.

He signed a decree that would impose a ban on crude oil supply and all related products to companies that stick to the price cap.

This ban will come into effect from February 1st and would stay in place for about five months. Meanwhile, the stock indexes in Russia recorded declines.

There was a 2.3% drop in the RTS index, which is dollar-denominated, as it came down to 937.6 points. As far as the MOEX index is concerned, it is denominated in the Russian ruble.

This index also recorded declines, but of 0.5%, as it had reached a value of 2,141.3 points. The sanctions from Western nations are primarily because of the country’s invasion of Ukraine back in February.

The price of brent crude oil also dropped because of uncertain demand from China and worries about a recession dampening demand.