Rouble hits lowest level since 2016
moscow — The rouble dipped lower on Wednesday, hitting its lowest levels since 2016, as fears of increased geopolitical tensions with the West and new US sanctions against Moscow eclipsed higher oil prices.
The Russian market remains in a sell-off mode that began on Friday after the United States imposed new sanctions against Russian companies and prominent businessmen. The rouble hit 64.77 versus the US dollar on the Moscow Exchange, its weakest level since December 1, 2016, and losing 11 per cent of its value since before sanctions were imposed.
While fundamental factors, such as the state of the Russian economy and macroeconomic policies remained unchanged, risk aversion towards Russian assets has soared in the past few days. The market is now closely watching for an indication of how Moscow will respond to the latest US sanctions. Russia’s official reaction has so far been muted.
Kremlin spokesman Dmitry Peskov said on Tuesday it was not appropriate to take hasty decisions in terms of retaliation, and stressed that the market sell off was emotionally-driven and would be followed by a correction. In an apparent sign that the rouble’s drop has caused concerns for authorities, the finance ministry did not buy any foreign currency for its reserves on Monday, central bank data showed on Wednesday. The central bank, which carries out daily FX purchases on behalf of the finance ministry, said in an emailed comment that purchases of foreign currency had a variety of reasons, including high market volatility. —