Ruble Drops against the Dollar on Sanctions Fears


Ruble Drops against the Dollar on Sanctions FearsThe ruble touched a record-low against the dollar while shares declined on concern that Russia may face harsher sanctions due to the escalating violence in Ukraine.

The currency fell 0.3 percent to trade at 37.2505 per dollar at Moscow close, after earlier declining to 37.51. The ruble dropped 0.3 percent to 48.9050 per euro, marking its fourth successive daily decline. It also fell 0.3 percent versus the central bank’s benchmark pool of euros and dollars to 42.4939.

The yield on 10-year ruble-denominated securities gained three basis points to 9.83 percent while the Micex Index of stocks tumbled 0.5 percent.

Officials from Ukraine, Russia, Ukrainian rebels and the Organization for Security and Cooperation in Europe gathered for peace talks in Belarus, paring the ruble’s decline by about 1 percent. Ukrainian authorities said that 1,600 Russian soldiers have crossed into the country, as European Union members agreed to roll out further sanctions against Russia if the violence worsens.

The geopolitical conflict has affected Russia’s economic growth, with analysts in a Bloomberg News survey expecting it to contract 0.2 percent in the third quarter of 2014.

“Fears of new sanctions from the EU are shaking the ruble market,” said Vladimir Miklashevsky, a Helsinki-based strategist at Danske Bank A/S. “Rebels are succeeding in their advance in eastern Ukraine so in the EU’s perspective, an escalation is happening.”

Analysts expect the ruble to drop a further 4.3 percent versus the central bank’s euro-dollar basket, touching the 44.40 threshold before the Bank of Russia intervenes to prop it up.

While most Russian stocks declined, OAO Rosneft saw its shares surge 1.3 percent on speculation the weaker ruble will rev up earnings as the energy firm usually gets paid in dollars. To register for a free 2-week subscription to ForexMinute Premium Plan, visit

To contact the reporter of this story; Yashu Gola at