The ruble weakened toward its lowest in more than two years on Wednesday as traders priced in the risk of more U.S. sanctions and foreign currency purchases by the Russian central bank took their toll.
The ruble has shed more than 8 percent of its value against the dollar so far this month, vulnerable to risk aversion and volatility that was fueled by jitters in other emerging markets and threats of further U.S. sanctions.
The U.S. Treasury imposed sanctions on various Russian entities on Tuesday, and a new tranche of sanctions announced by the U.S. State Department earlier this month was expected to take effect later on Wednesday.
U.S. lawmakers are now pushing for yet more aggressive steps against Russia, although Donald Trump’s administration insists current sanctions are already having an effect.
The ruble hit 68.07 versus the dollar, a step away from its weakest level since April 2016, the 68.66 it touched earlier this month.
The weaker ruble usually spurs inflation and curtails economic activity but boosts Russia’s budget revenues, since commodities are sold abroad for dollars.
The Kremlin played down a fall in the ruble last week, saying there was a “certain volatility” in the market but that Russia’s economic and financial systems were entirely stable.
The ruble is ignoring rising oil prices and the dip in the dollar index, BCS said, adding that technical analysis suggests the dollar-rouble pair will keep on climbing higher.
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