The rouble weakened past 100 to the dollar on Wednesday, heading back to record lows, and the stock market remained closed as Russia’s financial system staggered under the weight of Western sanctions imposed over Moscow’s invasion of Ukraine.
The rouble was 4 per cent weaker on the day at 105.20 against the dollar as of 0752 GMT in Moscow trade and shed 4.3 per cent to trade at 117.90 to the euro, supported by Russian companies.
For the third day in a row, the rouble was weaker outside Russia, trading at 112 to the dollar on the EBS electronic trading platform, but still off the all-time low of 120 hit on Monday.
The rouble has tumbled since the start of Russia’s invasion of Ukraine on Feb. 24, at one point losing a third of its value in Moscow trading.
Russia addressed the crisis with a sharp interest rate hike to 20 per cent, telling companies to convert 80 per cent of their foreign currency revenues on the domestic market as the central bank stopped its own FX interventions due to sanctions that targeted Russia’s state reserves.
Moscow calls its actions in Ukraine a “special operation” that it says is not designed to occupy territory but to destroy its southern neighbour’s military capabilities and capture what it regards as dangerous nationalists.
As households and businesses in Russia rushed to convert the falling rouble into foreign currency, banks raised rates for foreign currency deposits.
Russia’s largest lender Sberbank is offering to pay 4 per cent on deposits of up to $1,000, while the largest private lender Alfa Bank is offering 8 per cent on three-month dollar deposits.
The weak rouble will hit living standards in Russia and fan already high inflation, while Western sanctions are expected to create shortages of essential goods and services such as cars or flights.
REUTERS