The Russian currency is still up for the year, trading data shows
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The Russian ruble dropped to a nearly eight-month low against the US dollar on the Moscow Exchange on Thursday, erasing the gains of the previous months amid the sanctions-induced decline in exports and the active recovery of imports.
The ruble slipped to 72 rubles to the greenback in early trading, its lowest level against the dollar since April 29. The ruble was also trading a little under 77 against the euro, also the weakest rate since the end of April. The Russian currency has slipped in value for the ninth trading session in a row.
However, the ruble’s dynamics for the year remain positive, data shows. It is still trading 4% higher than it did in January, prior to the start of Russia’s military operation in Ukraine and the ensuing Western sanctions.
Economists say the ruble exchange rate is affected by several factors, the main one being the change in the ratio of export-import flows. Other factors include the EU embargo on Russian oil, the increase in the price difference between Russian Urals grade oil and the global benchmark Brent crude, as well as the continued soft monetary policy of the central bank, Mikhail Seltzer, an expert at BCS World Investments, told Forbes Russia.
“The speed of the rally in foreign currencies should not be surprising. The accumulated contradictions back in the fall spoke of an impending operational weakening of the ruble. It could happen in the beginning of 2023, but it happened in December,” Seltzer said.
Analysts expect the currency to drop even further in the months to come.
“As expected, the EU embargo on Russian oil, the price ceiling imposed by the G7 and the embargo on Russian oil products coming into force in February 2023 will lead to an even sharper reduction in the surplus next year. This will lead to expectations of a weaker ruble over the next few months,” Mikhail Shulgin, head of global research at Otkritie Investments, told the news outlet.
Experts polled by RBK news outlet predict that it is unlikely the ruble will soon return to its high of 60-62 per dollar, which it reached over the summer, but say the rate is likely to consolidate around the mark of 70 per dollar.
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