Russian ruble and US dollar banknotes can be seen in this illustration taken on February 24, 2022. REUTERS / Dado Ruvic / Illustration / File Photo
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MOSCOW, March 3 – The Russian ruble fell to new record lows against the dollar and the euro on Thursday after Fitch and Moody’s downgraded Russia’s sovereign debt to rubbish.
At 10:12 GMT the ruble was more than 9% weaker against the dollar at 116.8 and almost 8% against the euro at 125.1 on the Moscow Stock Exchange, which is the first time the ruble has traded weaker than 110 for dollar in Moscow and for the first time exceeded 123 for the euro.
Russia’s central bank has imposed a 30% commission on foreign currency purchases by individuals on foreign exchange exchanges – a move that brokers say is intended to curb demand for dollars – but that has done little to stem the ruble’s decline. Read more
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The finance ministry said it was suspending purchases of foreign currency and gold this year as part of suspending parts of its fiscal rule, a move that also aims to ease pressure on the ruble. Read more
Russia’s financial markets have been shaken by sanctions imposed over its invasion of Ukraine, the biggest attack on a European country since World War II.
Russia calls its actions in Ukraine a “special operation” which it says is not intended to occupy territory, but to destroy the military capabilities of its southern neighbor and capture dangerous nationalists.
Since Russian troops entered Ukraine on February 24th, the ruble has fallen nearly 30 percent against the dollar, and analysts said Thursday it is likely to remain highly volatile.
The government has ordered Russian exporters to convert 80% of their foreign exchange earnings into rubles in another attempt to support the local currency, but people are still queuing at banks to buy dollars as the ruble falls.
“There is a huge uncertainty about current events and there will be a lot of volatility, volumes will be much lower, liquidity will be incredibly low,” said Chris Turner, global market manager at ING. “At the moment, there is a lot of foreign money caught in Russia.
Trading on the Moscow Stock Exchange remained largely closed on Thursday, the fourth day of restrictions imposed by the central bank.
Fitch said last night that US and European Union sanctions banning all transactions with the Bank of Russia would have “a much greater impact on Russia’s credit base than all previous sanctions.”
Moody’s said the severity of the sanctions “exceeded Moody’s initial expectations and will have significant credit implications”. Read more
S&P downgraded Russia to a sub-investment grade last week. Read more
Russia’s invasion of Ukraine and retaliatory sanctions have led to dire warnings for the Russian economy, with the Institute of International Finance forecasting double-digit growth this year.
On Wednesday, FTSE index providers Russell and MSCI said they would remove Russian stocks from all their indexes after a senior MSCI chief called the Russian stock market “non-investment” earlier this week. Read more
Russia’s national settlement depositary said on Thursday that payments of coupons on Russia’s OFZ government bonds due on Wednesday were made only to local holders, citing a central bank order banning payments to foreigners.
For a guide to Russian stocks, see
For Russian treasury bonds, see
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Report from the Moscow Bureau and Anisha Sirkar in Bangalore Edited by Christian Schmollinger and Mark Potter
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