The ruble is recovering after falling above $100 against the dollar to a 7-week low

October 3 (Reuters) – The Kremlin stressed on Tuesday that there was no need to worry after the Russian ruble fell beyond the symbolic threshold of 100 to the dollar in early trading, before rebounding slightly, affected by foreign currency outflows.

The ruble’s recent fall to triple digits in August led the Bank of Russia to emergencyly raise interest rates by 350 basis points to 12% and authorities discussed reimposing controls to support the currency.

By 1150 GMT, the ruble rose 0.6% against the dollar to 99.17, after reaching 100.2550 in early trading, the lowest level in more than seven weeks.

It rose 1% to trade at 104.91 against the euro and rose 0.5% against the yuan to 13.53.

Kremlin spokesman Dmitry Peskov told reporters: “So far there is nothing to worry about.” “Macroeconomic stability is fully ensured by the actions taken by the macro regulator and the government, so there are no reasons for concern here.”

Brent crude, the global standard for major Russian exports, fell 0.8 percent to $90.01 a barrel, its weakest level in almost a month, but still well above its 2023 average.

The Russian currency tends to come under pressure at the beginning of each month, having lost the support of the favorable tax period at the end of the month that usually sees exporters remit foreign currency earnings to meet domestic obligations.

“Rising oil prices and an increase in the key interest rate lead to an improvement in the outlook for the ruble, but in the medium term,” Promsvyazbank analysts said. They expected the ruble to move for a short period beyond 100 against the dollar in the absence of new support measures from the authorities.

“Psychological barrier”

President Vladimir Putin’s economic adviser criticized the central bank as the ruble fell to 101.75 to the dollar in August, blaming its loose policy in a sign of growing internal discord.

“This level (100) does not represent technical resistance, it is an important psychological barrier,” said Alexei Antonov from Allure Broker. “At the moment, everything is in favor of a continued decline in the ruble.”

Following an emergency rate hike in August, the central bank raised interest rates again in September to 13%. Analysts polled by Reuters expect the central bank, which is also facing stubborn inflationary pressures, to tighten monetary policy again at its next meeting scheduled for October 27.

The ruble has charted a turbulent course since Russia’s invasion of Ukraine in February 2022, falling to a record high of 120 rubles to the dollar in March last year before recovering to its highest level in more than seven years a few months later, supported by capital controls and appreciation. Export revenues.

A decline in exports, affected by Western sanctions and changing trade flows, coupled with a rebound in imports this year, have weakened the ruble. Russia’s current account surplus shrank by 86% year-on-year to $25.6 billion in the January-August period.

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