© Reuters. An image shows Russian ruble coins in this illustration photo taken on March 25, 2021. REUTERS/Maxim Shemetov/Illustration
by Alexandre Maru
(Reuters) – The ruble fell to its lowest level in nearly 15 months against the dollar on Monday, in one of its most volatile sessions of the year, as investors responded for the first time to a failed insurrection by armed mercenaries in Russia at the weekend.
Mercenaries led by Yevgeny Prigozhin withdrew from the southern Russian city of Rostov-on-Don on Saturday night, under a deal that halted their rapid advance on Moscow but left questions about President Vladimir Putin’s grip on power and officials demanding public loyalty.
The ruble, which is supported by month-end tax payments and which typically sees exporters remitting foreign currency earnings to meet domestic obligations, was 0.5% weaker against the dollar at 85.10 by 1400 GMT.
It oscillates between 87.2300, its weakest point since March 2022, and 84.25, the widest trading range seen in a single session in 2023.
The ruble lost 0.6% to trade at 92.92 against the euro and fell 0.2% against the yuan to 11.74, also recovering after hitting more than two-month lows against both currencies.
Monday’s drop came as demand for foreign currency rose over the weekend, when Russian banks offered exchange rates well above the official rate of over 90 to the dollar.
First Deputy Prime Minister Andrei Belousov said that demand for foreign currency has increased sharply in about 15 regions.
“On average, it was about 30%, but the most active growth in cash demand was recorded in the southern regions – in Voronezh, Rostov and Lipetsk, as well as in large cities,” Belousov said. “Demand there has increased by about 70-80%.”
Weekend sale
Analysts said domestic politics was to blame, with Allure Broker’s Alexey Antonov warning that although the peak of tensions has passed, “unpleasant remnants” will linger for some time.
“The ruble in the cash market sold off sharply on Saturday as bid/bid spreads widened significantly,” Goldman Sachs (NYSE: NYSE: NYSE) said in a note.
But Goldman Sachs said that the Russian authorities have plenty of resources to prop up the currency, arguing that public finances are the most important factor in determining currency movements.
“If the response to the events over the weekend is to increase spending, we believe this will be followed by a weaker ruble.”
Investors globally have been watching the fallout from the aborted rebellion, with some expecting a move to safe havens such as US government bonds and the dollar.
It rose, a global benchmark for Russia’s main exports, 0.7% to $74.41 a barrel.
Russian stock indices were lower.
Investment bank Senara said that “unexpected and dramatic events” that occurred on Friday night triggered a sell-off, but that a quick resolution of the situation means that another wave of selling is unlikely.
The dollar-denominated RTS index fell 1.4% to 1,025.8 points. Russia’s ruble-based MOEX index fell 0.9 percent to 2,770.8 points.
Shares of most companies outperformed the main index after falling sharply in after-hours trading late on Friday.
