Russian Rouble Rebounds After Major Decline Amid Currency Market Shifts

The Russian rouble strengthened against the dollar after experiencing a significant decline, triggered by Ukraine’s recent major attack on Russian territory. Market dynamics shifted to the over-the-counter (OTC) market after Western sanctions on the Moscow Exchange. The central bank's intervention and other factors have influenced the fluctuation.

The Russian rouble showed a resurgence against the dollar on Thursday, partially recovering from a steep 9% drop that began last week following Ukraine's largest assault on Russian soil since the war's onset. By 0800 GMT, LSEG data indicated the rouble had strengthened by 1.3%, reaching 88.60 to the dollar. It had hit a 10-month low against the dollar during trading on August 13.

Market dynamics have shifted to the over-the-counter (OTC) market, making pricing data opaque, due to Western sanctions imposed on the Moscow Exchange and its clearing agent, the National Clearing Centre, as of June 12. Despite these changes, the Moscow Exchange showed a 0.5% rise in one-day rouble-dollar futures to 87.80 on Wednesday, guiding OTC rates.

The central bank set the official exchange rate at 90.01 to the dollar for Thursday, nearly recovering 3% compared to Wednesday. Despite heightened net daily sales of yuan by the central bank and finance ministry, and high key interest rates, the rouble's decline against the dollar and euro persisted. Russian exporters, who typically support the rouble through foreign currency sales for tax payments, are currently inactive as payments are due later in August. Reuters noted that foreign banks in Russia were principally selling the rouble over the past week.

OTC market analysis showed a 0.4% strengthening of the rouble to 11.90 against the Chinese yuan, Moscow's most traded foreign currency. During the August 13 session, the rouble hit its lowest against the yuan since June 24. LSEG data reported a 0.49% increase to 98.29 against the euro on Wednesday. At the same time, Brent crude oil, Russia's main export benchmark, rose 0.21% to $80.20 per barrel, fueled by optimism over potential U.S. interest rate cuts boosting economic activity and fuel consumption.

(With inputs from agencies.)