Sanctions Shakeup: Russian Rouble Struggles Amid New U.S. Restrictions

The Russian rouble eased from one-year highs against the dollar and yuan amid low liquidity, following new U.S. sanctions on key financial systems. The restrictions led to varying prices in OTC markets, complicating reliable pricing. A general rethinking of FX investment risks and trading restrictions further influenced the rouble's movements.

The Russian rouble eased from over-one-year highs against the dollar and yuan on Thursday, paring some of the previous session's hefty gains amid low liquidity as markets responded to last week's new U.S. sanctions on key financial systems. The sanctions on Moscow Exchange and its clearing agent, the National Clearing Centre (NCC), led to a range of varying prices and spreads as trading shifted to the over-the counter (OTC) market on June 14, obscuring access to reliable pricing for the Russian currency.

On the interbank market, where liquidity can be low and major Russian banks that have been sanctioned cannot participate, the rouble traded 2.1% lower by 0751 GMT against the dollar at 84.40. The average dollar-rouble mixed composite rate, calculated by LSEG and based on data from international brokers and counterparties, was at 81.92, demonstrating how wide the spreads - the difference between buying and selling prices - can now be.

The central bank's official dollar-rouble rate was set at 82.62 for Thursday, calculated on the basis of OTC trading. The rouble has strengthened sharply since the sanctions were imposed amid low liquidity, largely caused by various technical difficulties to do with interbank limits when closing FX deals on the OTC market.

"The main driver of rouble strengthening is the closing of foreign currency positions against the backdrop of the halt in dollar and euro exchange trading, and a general rethinking of FX investment risks," said T-Investments chief economist Sofya Donets. Market imbalance is skewed in favour of sellers of foreign currency due to restrictions imposed by banks and brokers in the wake of the sanctions. This has created problems in withdrawing and using funds, helping to strengthen the rouble.

Against the yuan, the rouble shed 2.2% to 11.44, according to an analysis of the OTC market. The yuan had surpassed the dollar to become the most traded currency with the rouble in Moscow before last week's sanctions were imposed. It accounted for a 54% share of the FX market in May.

Brent crude oil, a global benchmark for Russia's main export, was unchanged at $85.05 a barrel.

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