Ruble Weakens to 63 vs. Dollar

The Russian ruble dropped to 63 per dollar on Monday as investors’ appetite for risk decreased due to concerns about the impending recession and pressures on global inflation. Investors were also anticipating the Bank of Russia’s rate-setting meeting.

Markets are also expecting a flurry of additional interest rate decisions this week, including those from the European Central Bank (ECB) and the Federal Reserve of the United States.

The ruble was 0.9% weaker against the dollar at 62.99, having earlier crossed the 63 mark, and was 1.7% weaker against the euro at 66.65, its lowest level since late May.

It had fallen 0.4% against the Chinese yuan to 9.01. Volatility has been high since the enactment of a price cap on Russian oil.

Oil Experiences a Fall

Brent crude oil, the global benchmark for Russia’s main export, was down 0.7% at $75.6 per barrel, weighing on Russian stock indexes. Even if the EU imposes a new round of sanctions against Russia today at the EU Council meeting, it is unlikely to disrupt the overall stability of the Russian market. However, there may be some reaction in certain stocks.

Despite the war in Ukraine, European growth responded well in 2022, but the outlook is decidedly bleak. Deutsche Bank says this in its latest Europe report, which predicts a “double-dip recession” in 2023. According to DB, 2023 will have stagflation, with a recession between the fourth and fifth quarters of this year. Primarily due to the energy crisis and its effects on growth, real income, and business confidence.

The USD/JPY rose 0.1% to 136.69 after data showed that producer price inflation in Japan rose faster than expected, indicating that the economy will face more pressure in the coming months.

The risk-sensitive AUD/USD fell 0.2% to 0.6778, while the USD/CNY rose 0.2% to 6.9745, with the yuan weighed down by a significant increase in local COVID infections, which may delay a broader reopening after China eased some restrictions last week.