Ruble weakens to 16-month low

The drop is being attributed to a decrease in foreign currency supply and a changing trade balance

The Russian ruble has extended its losses against major global currencies, sliding to more than a 16-month low early on Monday. 

The Russian currency was trading above 96 rubles to the US dollar at 7:29am GMT, its weakest level since March 28, 2022. It made a slight gain against the euro, having declined to more than a 16-month low of 106 on Friday. 

The ruble’s weakness has been attributed to soaring local demand for foreign currency that could be related to summer holiday season, and the typically lower support from exporters at the beginning of the month. 

Additional pressure on the ruble has been exerted by the latest decision of the Finance Ministry to switch from selling to buying foreign currency since August 7 within the framework of the budget rule, according to Promsvyazbank chief analyst Egor Gilnikov. 

He noted that the key pressure on the ruble occurred after an unexpected correction in the Moscow Exchange index, adding that influence of capital outflow from the country couldn’t be excluded. 

READ MORE: Moscow reveals reasons behind weakening ruble

Last week, Russian Finance Minister Anton Siluanov said the weakening of the ruble was mostly due to changes in the country’s trade balance and strong demand for foreign currency amid the holiday season.

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