(Reuters) – The Russian rouble tumbled to a more than 15-month low past 90 against the dollar today, with demand for foreign currency outweighing supply and as last month’s domestic political turmoil weighs on risk appetite.
By0933 GMT, the rouble was 1.5% weaker against the dollar at 90.54RUBUTSTN=MCX, its weakest point since late March 2022.
It had lost 1.4% to trade at 98.63 versus the euro EURRUBTN=MCX and shed 1.1% against the yuan to 12.47CNYRUBTOM=MCX.
Capital controls have helped insulate the rouble against geopolitics in the 16 months since Russia invaded Ukraine, but mercenary leader Yevgeny Prigozhin’s aborted march toward Moscow on June 24 reverberated through markets and raised questions about President Vladimir Putin’s grip on power.
The rouble lost more than 9% in June and is down around 20% so far this year, making it one of the world’s worst performing currencies.
The rouble will continue to push past 90 in the short term, said Alor Broker in a note, but with the exchange rate now determined by the balance of supply and demand, the rouble could eventually gain from exporting firms.
“Exporters will take advantage of the favourable conditions for them and transfer part of their FX reserves into roubles, including to be able to buy OFZ (bonds) before a key rate increase that looks inevitable,” Alor Broker’s Alexei Antonov said.
Analysts polled by Reuters last week expect the Bank of Russia to raise interest rates in July and again later in the year as inflationary pressure intensifies, and see limited room for the rouble to strengthen in the coming 12 months.
Russia’s finance ministry is due to hold three OFZ treasury bond auctions on Wednesday.
Brent crude oil LCOc1, a global benchmark for Russia’s main export, was down 0.4% at $75.93 a barrel, but at a higher level than last week.
“The rouble has so far failed to take advantage of the improving situation on the energy market…due to the reduced supply of foreign currency as tax payments peak,” said Bogdan Zvarich, chief analyst at Banki.ru.
The rouble typically enjoys less support from exporters at the start of each month, who tend to convert foreign exchange revenues into roubles later in the month to pay local liabilities.
The rouble will see slightly less support from FX interventions in the month ahead. The finance ministry on Wednesday said it would lower its daily sales of yuan.
Russian stock indexes were mixed.
The dollar-denominated RTS index .IRTS was down 1% at 977.8 points. The rouble-based MOEX Russian index .IMOEX was 0.1% higher at 2,811.0 points.
