Updated January 29th, 2024 at 15:17 IST
Russian rouble tests 2 week low despite oil price support and state interventions
Brent crude, a pivotal benchmark for Russia's primary export, recorded a 0.3 per cent increase.
- 2 min read
Rouble tests low: The Russian rouble dipped to its lowest point in nearly two weeks, breaching the 90 mark against the dollar on Monday, despite bolstering factors such as elevated oil prices, state-driven foreign currency sales, and the usual month-end tax payments that typically buoy the Russian currency.
As of 0724 GMT, the rouble displayed a 0.1 per cent weakening against the dollar, settling at 89.78, with an earlier touchpoint of 90.24, marking its lowest since January 16. Conversely, it made a marginal 0.1 per cent gain against the euro, trading at 97.36, and strengthened 0.1 per cent against the yuan, reaching 12.47.
Rouble likely to recover
Bogdan Zvarich, Chief Analyst at Banki-ru, expressed confidence that the rouble would likely recover from its morning losses throughout the session, citing support from the upward trajectory of oil prices. Brent crude, a pivotal benchmark for Russia's primary export, recorded a 0.3 per cent increase, reaching $83.80 per barrel.
Traditionally, month-end tax payments, compelling exporters to convert foreign currency revenues into roubles, act as a support mechanism for the Russian currency. However, Alexei Antonov of Alor Broker pointed out a shifting trend among exporters, who now spread their foreign exchange sales across the entire month, diluting the impact.
Despite these challenges, the rouble benefits from substantial support through state-led foreign exchange sales, amounting to 16.7 billion roubles ($185.9 million) daily. Furthermore, potential positive developments could arise if capital controls, mandating exporters to convert foreign currency revenue, are extended beyond April 30. The market awaits updates following the central bank's swift opposition to the government's proposal for an extension last week.
(with Reuters inputs)
Published January 29th, 2024 at 15:17 IST