Russian Ruble Plummets Amid War Concerns

The Russian ruble has fallen against the dollar to its lowest level since March 2022, and against the euro to its lowest level in the past 15 months amid rising tensions between Russia and Ukraine.

Currency analyst Tatha Ghose noted that the war and sanctions have negatively impacted Russia’s energy and commodity trading. According to Ghose, while the strengthening of the dollar against emerging market currencies does not fully reflect the ruble's depreciation when examining the USD/RUB pair alone, the increase of the EUR/RUB pair since mid-November makes the situation more evident. The USD/RUB has risen by 8.5% this month to reach 105.64, while the EUR/RUB has increased by nearly 5% to 111.12.

The Russian stock market is also in decline. High interest rates, weak external demand, and rising geopolitical tensions have reduced demand for Russian assets, causing the MOEX Russia Index to drop by 0.4% to 2,520 points, marking its lowest level since April 2023. The long-range missile strikes between Russia and Ukraine and Putin's easing conditions for the use of nuclear weapons have led to an escalation of the war and increased pressure on all Russian assets.

Additionally, signs of a slowdown in the Chinese economy are negatively affecting revenue expectations for major commodity producers on the Moscow exchange. In particular, the slowdown in manufacturing sectors weakens the market outlook for commodity producers, increasing pressure on the stock market. These developments threaten Russia's economic stability and strengthen the selling pressure on the ruble and the stock market.