Rouble crashes nearly 10% to about $134 as sanctions on Russia biteThe rouble weakened nearly 10 per cent on Monday to about $134, pressured under the weight of Western sanctions imposed over Russia's invasion of Ukraine and as Russia's financial system teetered.It sank to a low of $138.5 on Monday, before recovering slightly to $133.9975, still down nearly 10 per cent.The currency closed down over 10 per cent on Friday against the dollar at 122.
And at one point last week, the currency in offshore trading declined over 32% for the week, the most for any week on records back to 2007.
The bid-ask spread was extensive throughout last week in what traders called a sign of evaporating liquidity.For the week, the rouble in Moscow trade ended down more than 20 per cent against the dollar and the euro in Moscow trading as the country's economy buckled under the pressure of sanctions meant to isolate Russia in response to its invasion of Ukraine."Russian assets are being destroyed in value," Cristian Maggio, head of portfolio strategy at TD Securities, told Reuters.Russia's credit rating was cut deeper into junk by S-P Global, following similar moves from Moody's and Fitch, as international sanctions ramped up the chances of a default.
Russian forces in Ukraine sparked worldwide alarm as they seized Europe's biggest nuclear power plant and whiplashed financial markets.Dmitry Polevoy, investment director at Locko Invest, speaking to Reuters, cautioned that the sanctions imposed on Russia over the Ukraine invasion - which Moscow says is not designed to occupy territory - would lead to an economic shock of a magnitude not seen in a long time.On Friday, the Russian central bank lowered the commission on foreign exchange purchases by individuals via brokers to 12 per cent from 30 per cent.Analysts said an earlier move to hike the commission to 30 per cent for purchases of currencies like the dollar, euro and the British pound had led to distortions like a surge in demand for other currencies like the Chinese yuan and Japanese yen.In a move to stabilise wildly fluctuating markets, the Moscow Exchange imposed a ban on the short-selling of the euro currency and stock instruments.According to an executive order signed by President Vladimir Putin on Saturday, Russian companies will be allowed to pay foreign creditors in roubles to avoid defaults.The Russian stock market remained closed, and trading on bonds showed wide bid-ask spreads and little-to-no volume.But the currency has started the week in dire straits.The US and its allies plan toban oil imports from Russia will further weigh on the rouble.