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Peter Davis

An writer at FOMOdrive

  • Oct 03, 2023
  • 2 min read

The US dollar exceeded 100 rubles for the first time since August 14

In early trading on Tuesday, the dollar exchange rate rose above 100 rubles/$.

The Russian currency experienced a drop of nearly two rubles against the dollar on Monday.

After the tax period ended, the devaluation of the ruble became more pronounced.

The possibility of the Russian currency becoming even weaker in the near future is still a risk.

The dollar exchange rate surpassed 100 rubles/$ on Tuesday, the first time since mid-August when the ruble had a brief dip below this level. However, the ruble has since gained around 9% against the dollar in the past week.

RBC reports that, despite the Central Bank raising the rate and introducing trade restrictions, the ruble continues to weaken. The authorities' measures to stabilize the exchange rate can be divided into two main categories: monetary (high key rate) and administrative.

Two government decisions have different impacts on the ruble: a prohibition on the export of gasoline and diesel fuel, and export taxes on a broad range of products.

According to Alfa Capital, the effects of increasing the key rate have been exhausted. Russian Standard Bank believes that the ruble is still under pressure due to discussions about China's experience in managing the exchange rate.

If the financial authorities do not take new steps to support the ruble, the dollar exchange rate could remain above 100 rubles/$. The most effective measures to prevent this would be to prohibit foreign companies from leaving the Russian market and to require exporters to sell their foreign currency earnings.

Zenit Bank has noted that verbal interventions alone are not enough to reverse the downward trend of the ruble, despite authorities discussing the possibility of tightening capital controls. There is nothing to oppose the weakening of the ruble.

Promsvyazbank predicts that the dollar exchange rate is unlikely to remain above 100 rubles for an extended period of time. In the medium term, the Bank of Russia's increase in the key rate and the high cost of oil will have a positive effect on the Russian currency's performance.

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