The rouble fell against the dollar on Wednesday, going past 71. Sanctions on Russian oil and the likely effect they will have on export earnings put pressure on the Russian currency.
Last week, the rouble lost about 8% of its value against the dollar. Since an oil embargo and price cap went into effect last week, the rouble is on track for a big drop this month. The Finance Ministry says that the recent drop is because imports are getting better.
At 7:05 GMT, the rouble was 1.1% weaker against the dollar at 71.19, heading toward last week’s nearly eight-month low of 72.6325.
It fell 0.5% against the euro and was worth $75.37. It fell 1.4% against the yuan and was worth $10.12.
Related: Nikkei: Japanese companies will stop insuring ships in all Russian waters.
Even though the rouble was trading in a narrower range early on Wednesday, it has been very volatile over the past two weeks and is likely to have sharp swings as trading slows down before Russia’s New Year holidays.
“The recent drop in energy prices is definitely putting pressure on the rouble,” said Olga Yangol, head of emerging markets research and strategy for the Americas at Credit Agricole (OTC: CRARY) CIB. “The new Western sanctions are partly to blame for this.”
Yangol said that the rouble will be fairly stable in the future. He said that the oil price will be mostly affected by geopolitics and that OPEC+ will continue to cut production in response to market fundamentals.
At $83.7 a barrel, Brent crude oil, which is a global standard for Russia’s main export, was down 0.7%.
President Vladimir Putin finally gave Russia’s long-awaited response to the Western price cap on Tuesday. He signed a decree that stops countries that follow the cap from getting crude oil and oil products from February 1 to May 1.
Russian stock indexes were not all the same.
The RTS index, which is measured in dollars, went up 0.8% to 952.9 points. The MOEX Russian index, which is based on the rouble, stayed the same at 2,152.0 points.
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