The Ruble Has Dropped to An 8-Month Low

The Russian ruble fell to an 8-month low against the dollar, weighed down by fears that sanctions on Russian oil and gas would limit export revenues.

The ruble fell 0.9% against the dollar to 72.83, its lowest level since April 27.

It fell 0.7% against the euro to 76.93 and 0.6% against the yuan to 10.31.

As recovering imports have combined with declining exports to put pressure on the currency, the ruble has now lost the crucial support of a month-end tax period where exporters typically convert foreign currency revenues into roubles to pay domestic liabilities.

Since the price cap went into effect on December 5, the ruble has lost about 15% against the dollar.

Russia’s economy is also in trouble as the year 2023 approaches. On Wednesday, November economic data showed that a labor shortage caused by Putin’s late September partial mobilization order was harming growth prospects.

DXY Falls

The dollar index fell 0.2%. Gold becomes more alluring for buyers who hold other currencies as the dollar drops. The benchmark 10-year Treasury yield in the United States fell after reaching a six-week high the previous session.

Traders will look for clues about the Fed’s rate-hike strategy in the weekly U.S. jobless claims report.

Due to obstinate rate increases in the United States, gold should decline by 1% annually. On hopes that the U.S. Federal Reserve will curtail rate increases, prices have risen by almost $200 since they reached a more than two-year low in September.

Fed Chair Jerome Powell has stressed the need to keep rates high for a while to combat inflation, but the Fed slowed its rate hike pace to 50 bps in December after four consecutive increases of 75 basis points.

The anti-inflationary appeal of gold is diminished as interest rates rise, and the opportunity cost of holding an asset that doesn’t pay interest is increased.