Ruble sinks to new 2023 low

Analysts attribute the depreciation to the drop in foreign exchange earnings from exports and domestic demand

The Russian ruble on Wednesday continued its slide against major global currencies, dropping to a new 16-month low.

According to MOEX data, the Russian currency was trading above 98 rubles to the US dollar at 11:33 GMT, its weakest level since March 25, 2022. The ruble also weakened against the euro, dropping to nearly 108.

Analysts explain the ruble’s depreciation by the drop in foreign exchange earnings from exports which are unable to cover the increasing local demand for foreign currency amid the stabilization of imports and, most recently, the summer vacation season. Some also note the typically lower foreign currency earnings sales from exporters at the beginning of the month. However, many expect a correction in the short term.

“Factors that may strengthen the ruble are gradually accumulating, but the dynamics do not reflect them yet. Once currency sellers appear on the market, these factors may be realized and the correction will reach 90-92 rubles to the dollar,” Maxim Pukhov, an analyst at FG Finam, told news outlet RBK.

In its latest risks review last week, the Russian central bank said the weakening of the ruble poses no threat to Russia’s financial stability.

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