Russian rouble weakens past 63 vs dollar after EU sanctions

A woman holds Russian Rouble banknotes in this illustration taken May 30, 2022. — Reuters pic

A woman holds Russian Rouble banknotes in this illustration taken May 30, 2022. — Reuters pic

Tuesday, 31 May 2022 4:05 PM MYT

MOSCOW, May 31 — The Russian rouble firmed past 61 against the dollar today but soon slipped back towards 64 as capital controls provided support and concerns about new European sanctions dragged the market lower.

European Union leaders agreed in principle yesterday to cut 90 per cent of oil imports from Russia by the year-end and on other sanctions, such as cutting Sberbank from the SWIFT transaction network, to punish Moscow for its intervention in Ukraine.

At 0732 GMT, the rouble was 1.5 per cent weaker against the dollar at 63.09. Last Wednesday it had hit 55.80 to the dollar, its strongest since February 2018, before falling to 66.70 by the end of the week.

Against the euro, the rouble eased 0.6 per cent to 64.71, having last Wednesday hit a seven-year high of 57.10, at the peak of month-end tax payments that usually prompt export-focused companies to convert foreign currency to meet liabilities.

Boosted by capital controls, the rouble had risen to become the world’s best-performing currency so far this year until last week’s slide. New gas payment terms for EU consumers that require conversion of foreign currency into roubles and a fall in imports have also supported the rouble.

Russian stock indexes were down.

The dollar-denominated RTS index fell 2.2 per cent to 1,188.3 points. The rouble-based MOEX Russian index was 0.8 per cent lower at 2,381.0 points.

Shares in Sberbank, Russia’s No.1 lender, slightly underperformed the broader market and fell 1.1 per cent on the day after the EU agreement on new sanctions. The bank said the move to cut it from the SWIFT messaging system would not affect its operations. — Reuters