Russia-Ukraine war: Rouble tumbles to lowest in a year

The Russian rouble has suffered its biggest intraday fall of the year as it tumbled to the lowest levels against the dollar and euro since April last year in the face of a foreign currency crunch in Moscow and the sale of Western businesses in Russia.

The rouble nosedived to 113 to the dollar after President Vladimir Putin ordered the invasion of Ukraine in February 2022, though the Russian central bank and finance ministry stabilised the currency and it strengthened to 50 per dollar in July.But since the West imposed a price cap on Russian oil – the lifeblood of the Russian economy – late last year, the rouble has weakened from about 60 per dollar to more than 80 this week.

On Friday, the rouble skidded more than two percent against the US dollar to an intraday low of 83.5.

Traders said the Russian currency was under pressure from a cocktail of problems including the sale of Western assets to domestic investors, which stoked demand for dollars, while lower oil prices in March cut export revenue.

The reported transfer of $1.21bn to Shell for its stake in the Far East Sakhalin-2 gas project was cited by traders as a major factor as the daily trade in the rouble-dollar pair is only about $1bn per day, down from more than $3bn a day before the war.

The rouble is the third-worst performer among global currencies so far this year, behind only the Egyptian pound and the Argentinian peso, calculations by Reuters news agency show.

Traders said the recent recovery in oil prices from last month’s declines is likely to support the currency in the coming weeks. Russia is the world’s second-largest oil exporter behind Saudi Arabia.

Oil prices fell in late March but have rebounded after banking turmoil in the West and an OPEC+ decision to cut output targets. Brent crude oil fell as low as $70 in late March but was trading at about $85 on Thursday.