Investing.com - The Russian rouble fell to new all-time lows against the dollar and the euro on Wednesday, as ongoing tensions in eastern Ukraine and broad based risk aversion towards Russia, as well as falling oil prices continued to pressure the currency lower.
USD/RUB was up 0.78% to 42.77 from 42.44 late Tuesday. The rouble has fallen by around 16% against the dollar in the last three months.
Tensions between Ukraine and Russia remained high after Moscow said Monday that it intends to recognize the results of elections due to held by pro-Russian separatists in eastern Ukraine this weekend.
Ukraine’s newly elected pro-western government says the polls violated the fragile peace deal between the two countries. A ceasefire has been in effect since September 5, but the situation remains volatile.
Sanctions imposed on Russia by the U.S. and the European Union for what they say is its role in backing the separatists have weakened the rouble, caused a spike in inflation and have almost completely shut Russian companies out of the global financial markets.
At the same time, the country’s economy has been hit by falling oil prices. Russia is the world’s second-largest oil exporter and half of its budget revenue is financed by taxes on energy exports.
On Friday, Russian government ministers warned the economy and budget may suffer if low oil prices and Western sanctions continue for some time.
Russia's central bank has spent around $55 billion of its international reserves so far this year in a bid to prop up the rouble, leaving its total reserves at approximately $452 billion.
The bank is to hold its next policy meeting on October 31.
Ratings agency Standard & Poor’s kept its sovereign rating on Russia unchanged at BBB, on Friday but said it expects” usable foreign currency reserves to decline to about four months of imports by 2017, from eight months in 2014, as a result of the central bank providing foreign currency liquidity support to the economy”.
Elsewhere, EUR/RUB was up 0.81% to 54.48, from 54.04 late Tuesday.