Ruble bounces back after reaching a one-month low against the dollar
Published on: December 7, 2023.
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The Russian rouble faced some challenges in early trade on Thursday, causing it to hit a more than one-month low. The currency was affected by low oil prices and a decrease in foreign currency supply from exporters. However, it later recovered, with the rouble becoming 0.3% stronger against the dollar at 92.57. This improvement followed its weakest point since November 3 which was at 93.56. The rouble also gained 0.3% and 0.1% against the euro and the yuan respectively.
Alexei Antonov of Alor Broker stated that the devaluation of the rouble continues, and he expects it to move toward 97.5 to the dollar in the coming sessions. Last week, the rouble had fallen from around 89 to the dollar. Russian exporters usually convert foreign currency into roubles during the month-end tax period, but the rouble has lost support from this practice recently. Despite this setback, the currency had experienced seven weeks of gains, rebounding from over 100 to the dollar. This positive outcome was a result of high interest rates and reduced capital outflows following the forced conversion of some foreign currency revenue for exporters that President Putin introduced in October.
Central Bank Governor Elvira Nabiullina’s speech on Thursday will be closely monitored by the market as it could provide insight before the bank’s final rate decision of the year next week. Reuters analysts predict that the Bank of Russia will raise rates to 16% on December 15.
CEO of Sberbank, Germany Gref, mentioned in an interview with state television that the fundamental value of the rouble at the moment is roughly 90 to the dollar. He stated that there is no significant potential for strengthening or weakening of the rouble.
While the rouble faced challenges, Brent crude oil, a global benchmark for Russia’s main export, showed some improvement by increasing 1.4% to $75.33 a barrel. This recovery followed a decline to a more than five-month low in the previous session. Russian stock indexes, however, experienced a decrease.
The dollar-denominated RTS index was down 0.3% to 1,042.0 points, while the rouble-based MOEX Russian index decreased by 0.6% to 3,061.5 points.
(Source)
