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The Russian rouble plunged to its weakest level in over seven months against the dollar on Monday and was on the path to its biggest single-day drop since July.
Monday’s decline followed Russian President Vladimir Putin’s visit to Belarus, which stoked fears in Kyiv that he intends to pressure his ex-Soviet ally to join a fresh ground offensive, opening a new front against Ukraine, reported Reuters.
The drop also comes amid concerns that sanctions on Russian oil would hurt the country’s export revenue.
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The rouble was last at 68.75 against the dollar, declining more than 4.3%. The currency depreciated close to 10% in December. According to Alfa Capital analyst Yulia Melnikova, the weakening stems from concerns that an oil embargo and price cap will trim Russia’s oil export revenues, widening the budget deficit as imports gradually recover, the report said. “The sanctions rhetoric is also negative for the national currency,” Melnikova added.
Brent February futures were up 0.8% at $80.47 a barrel during Tuesday morning’s Asia session. The United States Brent Oil Fund BNO closed 1.53% higher on Monday, while the Vanguard Energy Index Fund ETF VDE closed 0.2% lower.
Outlook: Analysts anticipate upcoming month-end tax payments, where exporters convert foreign currency revenue into roubles, to support the Russian currency. However, having breached the 65 threshold for the first time since May, it could settle into a new, weaker range, they said.
“Our view on oil, upcoming taxes and dividends allow us to maintain a forecast for a small rise in the near term,” said Dmitry Polevoy, head of investment at Locko Invest, according to Reuters.
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Image and article originally from www.benzinga.com. Read the original article here.