As The West Tightens Sanctions Against Russia, The Rouble Plummets To New Laws

• The rouble fell to 119.50 per dollar in Asian trading, a record low for the economy and a steep 30 % drop from Friday’s close. Since then, it has recovered to around 110 cents per dollar.

• On Sunday, Russia’s central bank (CBR) unveiled a series of steps to assist local markets as it hurried to deal with the consequences from sanctions that will prevent some banks from using the SWIFT international payment system.

• Russian President Vladimir Putin authorized his military leadership to deploy nuclear-armed weapons on Sunday in response to Western reprisal for his invasion on Ukraine, which was the deadliest strike on a European country in history state since World War II.

The rouble fell to 119.50 per dollar in Asian trading, a historic low for the economy and a steep 30 % drop from Friday’s close. Since then, it has recovered to around 110 cents per dollar.

The Rouble Plummeted To 119.50 Per Dollar

The Russian rouble fell to a new low against the dollar on Monday, as Western nations imposed a wave of sanctions over the weekend in response to Russia’s invasion of Ukraine, including a freeze on the country’s foreign exchange reserves. The rouble fell to 119.50 per dollar in Asian trading, a record low for the economy and a steep 30 % drop from Friday’s close. Since then, it has recovered to around 110 cents per dollar. Russian President Vladimir Putin authorized his military leadership to deploy nuclear-armed weapons on Sunday in response to Western reprisal for his invasion on Ukraine, which was the deadliest strike on a European state country in history since World War II.

On Sunday, Russia’s central bank (CBR) unveiled a series of steps to assist local markets as it hurried to deal with the consequences from sanctions that will prevent some banks from using the SWIFT international payment system. The central bank announced that it would resume domestic gold purchases, establish a no-limit repurchase auction, and relax limitations on banks’ open foreign currency positions. Last week, the currency received some support from the first currency interventions by the Russian central bank since 2014, when Moscow took Crimea from Ukraine.

The sanctions on currency reserves, according to Rabobank analysts, eliminated what little support the rouble had. Even gold isn’t liquid if no one can swap it for foreign currency. Today, the rouble will be completely devalued they penned.

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A Fall In The Rouble Appears Inevitable

A fall in the rouble appears inevitable on Monday morning, wrote Ray Attrill, head of FX strategy at National Australia Bank, in a note on Sunday, adding that the weekend developments had heightened the probability of a Russian debt default. While the rouble may drop, I doubt you will see individuals placing new bets to sell the rouble at current levels so you may see it weaken, but I don’t believe you will see people transacting all that significantly, said Peter Kinsella, UBP’s global head of FX strategy in London. There is a broad dearth of liquidity, and where liquidity does exist, it is tilted toward rouble sellers. It’ll be tough because I see the rouble weakening significantly but just because it’s declining doesn’t imply it’ll be heavily traded.