Volatile Rouble: Navigating Sanctions and Market Dynamics

The Russian rouble weakened against the U.S. dollar after a previous spike, reflecting global market trends. Sanctions on the Moscow Exchange have made the yuan Russia's most traded currency, shifting dollar and euro trades to the OTC market. These changes have increased the rouble's volatility.

The Russian rouble experienced a downturn against the U.S. dollar on Tuesday, reversing gains from the day before. This comes amid global currency trends that saw the dollar rise to a four-month high. By mid-morning in Moscow, the rouble had depreciated by 2% against the dollar, compared to a 1.6% increase on Monday, as shown by LSEG data.

Against the euro, the rouble weakened by 1.8%, following a notable 2.2% strengthening in the previous session. In comparison, the rouble showed a slight improvement of 0.2% against the Chinese yuan, driven by better liquidity conditions in Moscow's trade market after earlier shortages.

Western sanctions from June have significantly impacted trading on the Moscow Exchange. With dollar and euro trades halted due to these sanctions, the yuan has become the dominant foreign currency in Russia. Consequently, over-the-counter markets now handle most of the trade in dollars and euros, making the rouble's exchange rate volatile and less transparent on official platforms.

(With inputs from agencies.)