New Delhi: On Friday, the Russian rouble experienced a weakening against the US dollar, falling below the 77 mark due to a drop in oil prices. Brent crude oil, a global benchmark for Russia’s primary export, decreased by 0.89% to $74.31 per barrel. This drop in oil prices resulted from concerns about fuel demand in China and the United States. However, demand from Russian exporters accumulating roubles to pay upcoming dividends limited the losses experienced by the currency.
In addition to the fall in oil prices, the rouble also weakened by 0.16% against the euro to 84.23 and 0.44% against the Chinese yuan, which has become increasingly important for the Russian economy over the last year. This is concerning for analysts, who remain cautious about the rouble’s medium-term trajectory despite its recent recovery after a period of heavy selling pressure in April.
The finance ministry’s announcement that Russia posted a $44 billion budget deficit in the first four months of 2023 further adds to these concerns. Moscow’s continued heavy spending and the plunge in energy revenues have contributed to this budget deficit. As a result, Russian stock markets were lower, with the dollar-denominated RTS index declining by 1.61% to 1,047.43, and the rouble-based MOEX Russian index falling by 1.08% to 2,567.21.
Looking ahead, it is uncertain how the rouble will perform in the coming weeks. The ongoing drop in oil prices, concerns about fuel demand, and Russia’s budget deficit are all factors that could continue to weaken the currency. However, demand from Russian exporters could also provide some support, and it remains to be seen how these competing factors will ultimately affect the rouble’s trajectory.
Overall, the current situation highlights the interconnectedness of the global economy and the impact that factors such as oil prices and government spending can have on currencies. As always, investors and analysts will be closely monitoring developments in order to make informed decisions about their investments in the Russian market.
