The Russian ruble weakens against the dollar, but fluctuates near 7-year highs

Dollar / ruble exchange    rate on the Moscow Exchange at intervals of 1 minute

Dollar / ruble exchange    rate  on Forex at intervals of 4 hours

The Russian ruble weakened against the dollar on Thursday, but hovered close to seven-year highs, helped by capital controls and the prospect of a favorable tax period ahead. However, the specter of a possible default loomed larger and wider.

President Vladimir Putin signed a decree on Wednesday imposing temporary procedures to meet Russia’s external debt obligations as the country teeters on the brink of default.

At 07:31 GMT, the ruble weakened 0.4% against the dollar to 53.36, but remained close to its highest level since June 2015 at 52.80 on Wednesday.

It rose 0.7% to trade at 56.01 against the euro, close to a more than seven-year high of 55.01 hit in the previous session.

The ruble, which has become the strongest currency in the world this year, is driven by Russia’s high income from commodity exports, a sharp drop in imports and a ban on household withdrawals in foreign currency.

Leading politicians used Russia’s annual economic forum in St. Petersburg last week to highlight the ruble’s recent appreciation. There are fears that this could hurt the economy as it slides into recession amid tough sanctions over a special military operation in Ukraine.

The ruble is also supported by companies that need to pay taxes at the beginning of next week. For export-oriented companies, this means converting revenue in dollars and euros into rubles.

Trading patterns suggest that exporters have not yet begun actively selling foreign exchange in preparation for these payments, broker Alor said in a note, which means the ruble still has room for appreciation and could hit 50 against the US currency as early as this month. .