Russian rouble pulls back from two-month high vs dollar

The Russian rouble weakened on Monday, pulling back from a more than two-month high against the dollar in the previous session, as voting continued in referendums that could see four Ukrainian regions annexed by Russia, Reuters reported.

High volatility buffeted Russian markets last week. The rouble and stocks recovered ground after initially slumping as President Vladimir Putin said he had signed a decree on a partial military mobilisation, significantly escalating what Russia calls its “special military operation” in Ukraine.

At 0705 GMT, the rouble was 0.8% weaker against the dollar at 58.39 RUBUTSTN=MCX, easing away from its strongest point since July 22 of 56.6525 hit on Friday.

It had lost 0.5% to trade at 56.60 versus the euro EURRUBTN=MCX, moving away from the near three-month low touched on Friday, and had shed 0.6% against the yuan to 8.139 CNYRUBTOM=MCX.

The rouble’s recent strength may seem abnormal, but the Russian currency has several growth drivers, said Alor Broker in a note.

“Dollars are being dumped due to fears of new sanctions being introduced, which will make trading in the U.S. currency in Russia if not impossible, then very difficult and expensive,” Alor Broker said.

Another support factor is a month-end tax period that usually sees Russia’s exporters convert their foreign currency earnings into roubles to pay to the treasury, the peak of which falls today.

Brent crude oil LCOc1, a global benchmark for Russia’s main export, was down 0.9% at $85.39 a barrel.