Ruble rally comes to screeching halt
OREANDA-NEWS The Russian currency continued to slump on Wednesday, falling to its lowest point since late May against the US dollar and the euro.
The ruble was 4.5% weaker against the greenback at 63.90, after touching 64.95, its weakest point since May 30. It was down 3.5% versus the euro, slumping to a five-week low.
A week ago, the ruble reached seven-year highs against the major currencies, but has since shed over 20% amid concerns that its strength is putting a dent in Russia’s income from exporting commodities and other goods priced in dollars and euros.
Experts say if the ruble’s three-day slump continues, it could ease the pressure on the Central Bank of Russia to cut interest rates and relax capital controls to keep the currency trading within the range policymakers want. A strong ruble could be bad for Russia’s budget, which receives substantial revenues from energy taxes denominated in foreign currencies but spends them in rubles.
Meanwhile, the president of the Financial Markets Association ACI Russia, Evgeny Yegorov, expressed confidence that the ruble’s current exchange rate is strong. He told RIA Novosti that despite the ruble losing more than 15% in value over the past three sessions, volatility remains so high that the odds of the ruble strengthening or weakening against the dollar are about the same.
The ruble dropped to record lows in March due to the pressure of Western sanctions, but rebounded dramatically. The Russian currency surged 143% between early March and late June, and has been named by Bloomberg the world’s best performing currency this year.
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