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Peter Davis

An writer at FOMOdrive

  • Oct 06, 2023
  • 3 min read

The ruble fell to three-digit levels against the US dollar

On Friday, the dollar exchange rate surpassed 101 rubles/$ for the first time since August 14.

Early on Tuesday, the ruble experienced a brief drop against the dollar, surpassing the 100 level before settling back below it.

Late Thursday, the dollar surged significantly, easily surpassing the 100 mark.

The Russian authorities have partially removed the restrictions on the export of diesel fuel and modified the regulations accordingly.

The ruble has recently experienced a renewed depreciation, which is largely attributed to the end of the September tax period. Additionally, despite high oil prices and the Bank of Russia's key rate increasing to 13% per annum over the past few months, Interfax-CEA notes that it has not been able to provide sustainable support to the national currency.

No definite choices have been taken to bring in more currency control regulations, yet the ruble is still trading with greater instability.

On Thursday at the Valdai international discussion club, President Putin stated that the Bank of Russia and the Russian government's steps in response to the weakening of the ruble are correct.

Bank St. Petersburg has warned that without significant verbal interventions, the ruble could weaken against the dollar to the rate of 102 rubles/$.

Promsvyazbank has expressed concern over the dollar's rise to three-digit levels against the ruble, as this could lead to increased volatility in the foreign exchange market. The authorities have yet to decide on measures to address the high demand for foreign currency, which is a result of the active economic growth and limited supply of foreign currency from exporters.

The bank is hoping that the "soaring" of the dollar exchange rate into the three-digit area will not be sustained, as it will prompt the authorities to take action to cool the foreign exchange market. Furthermore, in the latter half of October, the supply of foreign currency is expected to rise due to large companies paying a one-time tax on extra income, as well as the anticipated increase in oil and gas payments to the budget due to favorable oil prices.

At the start of the day, the dollar exchange rate saw a jump, but then began to drop in response to news about the reinstatement of the previous restrictions on oil workers and the lifting (with certain conditions) of the ban on exporting diesel fuel.

The Russian government's press service informed RBC on October 6 that they had decided to double the compensation for oil workers as part of the damper. This compensation is paid by the state to oil companies when the export price of gasoline and diesel fuel is higher than the domestic Russian price.

At least 50% of the diesel fuel produced must be supplied to the domestic market in order for the government to lift restrictions on the export of diesel fuel delivered to seaports via pipeline.

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