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Volatile rouble pares intraday losses as Russia slips into default zone

By 0758 GMT, the rouble was 0.2% stronger against the dollar at 53.31 RUBUTSTN=MCX, paring losses, having earlier shed as much as 2% to touch its weakest since June 21 of 54.4975. It had gained 0.1% to trade at 56.03 versus the euro EURRUBTN=MCX. The rouble, which has become by far the world's best-performing currency this year, has been driven by Russia's high proceeds from commodity exports, a drop in imports and a ban on households withdrawing foreign currency savings. The strong rouble squeezes the incomes of export-focused companies and could weigh on the economy as it tips into recession following harsh sanctions over what Moscow calls a "special military operation" in Ukraine. Capital controls have buttressed the rouble for months, while this week's peak of a month-end tax period that sees exporting companies convert dollar and euro revenue into roubles may add short-term support. There was no increase in currency sales by exporters last week, said Alor Broker in a note, meaning they could have left the process of forex conversion until the last minute, which would see the rouble strengthen. However, Alor said exporters may have already stockpiled the necessary rouble amounts. On the bond market, yields on 10-year benchmark OFZ bonds RU10YT=RR, which move inversely with their prices, fell to 8.68%, their lowest since early 2022. Russian stock indexes were gaining. The dollar-denominated RTS index .IRTS was up 0.3% to 1,418.7 points. The rouble-based MOEX Russian index .IMOEX was 0.3% higher at 2,399.8 points. (Reporting by Reuters; editing by Barbara Lewis) The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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