Russian Rouble Hits 10-Month Low Amid Geopolitical Tensions

The Russian rouble slumped to a 10-month low against the dollar following Ukraine's unexpected attack on Russia's Kursk region. By the end of the trading day, it rebounded slightly but remained significantly weakened. Major currency trades shifted to the OTC market due to Western sanctions, complicating pricing data.

The Russian rouble plunged to a 10-month low against the dollar during Tuesday’s trading session, following an unexpected Ukrainian attack on Russia’s Kursk region a week ago. However, by the end of the session, it managed to rebound to its opening level.

According to LSEG data, the rouble stood flat at 90.99 to the dollar by 1500 GMT, after hitting a low of 96.60, the weakest level since October 20, 2023. Since the attack on August 6, the rouble has depreciated by 6.2%. The shift in major currency trades to the over-the-counter (OTC) market, after Western sanctions on the Moscow Exchange and its clearing agent were imposed on June 12, has obscured pricing data.

One-day rouble-dollar futures on the Moscow Exchange, which guide OTC market rates, dropped by 0.4% to 89.60 on Tuesday, following a 2.5% decline in the previous session. The central bank’s official exchange rate, calculated using OTC data, was pegged at 92.65 for Wednesday, reflecting a 3% increase from Tuesday’s rate.

Despite higher oil prices and increased net daily sales of yuan by Russia's central bank and finance ministry, the rouble's weakness persisted. By 1500 GMT, it had weakened by 1.3% against the Chinese yuan, trading at 12.07, its weakest since June 24. Simultaneously, it fell by 0.2% against the euro to 99.70, with the central bank’s official exchange rate set at 96.69 roubles to the euro.

Further complicating the situation, Brent crude oil, a global benchmark for Russia’s main export, fell 1.0% to $81.24 a barrel, as market sentiment perceived a reduced risk of a broader conflict in the Middle East.