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Rouble recovers after hitting 8-month low vs dollar on sanctions fears

Published 12/29/2022, 02:00 AM
Updated 12/29/2022, 05:25 AM
© Reuters. FILE PHOTO: Rouble coin plunges into water in this illustration taken, May 23, 2022. REUTERS/Dado Ruvic/Illustration

By Alexander Marrow

MOSCOW (Reuters) - The Russian rouble pared losses to gain on Thursday after slumping to an eight-month low against the dollar in early trade, struggling under the weight of expectations that sanctions on Russian oil and gas may limit export revenues.

Despite recovering ground in another volatile session, the rouble has still lost more than 13% to the dollar since a Western price cap on Russian oil exports came into force on Dec. 5.

By 0957 GMT, the rouble was 0.8% stronger against the dollar at 71.64, having earlier touched 72.9175, its weakest since April 27.

It gained 0.6% to trade at 75.95 against the euro and firmed 0.6% against the yuan to 10.31, earlier touching a seven-month low of 10.326.

The rouble has now lost the key support of a month-end tax period that usually sees exporters convert foreign currency revenues into roubles to pay domestic liabilities, while recovering imports have combined with falling exports to add more pressure.

"The fundamental factor in the form of the change in current account parameters, where exports have decreased and imports risen, is putting noticeable pressure on the rouble's position," said Alfa Capital in a note.

Brent crude oil, a global benchmark for Russia's main export, was down 2% at $81.6 a barrel.

President Vladimir Putin this week delivered Russia's long-awaited response to the price cap, signing a decree that bans the supply of crude oil and oil products from Feb. 1 for five months to nations that abide by it.

Russia's economy is also on shaky ground heading into 2023. November economic data on Wednesday gave signs that a labour shortage linked to Putin's late September partial mobilisation order was hurting growth prospects.

© Reuters. FILE PHOTO: Rouble coin plunges into water in this illustration taken, May 23, 2022. REUTERS/Dado Ruvic/Illustration

Russian stock indexes were higher.

The dollar-denominated RTS index was up 1% to 942.7 points. The rouble-based MOEX Russian index was 0.2% higher at 2,144.5 points.

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