Russian Rouble Battles Economic Storm Amid Sanctions and Missile Tensions

The Russian rouble slightly rebounded against the U.S. dollar following new sanctions last week. It remains at a two-year low due to recent geopolitical tensions, including a hypersonic missile launch by Russia. Analysts expect verbal interventions from financial authorities to curb inflation and stabilize the currency.

The Russian rouble showed a slight recovery against the U.S. dollar on Monday, despite ongoing pressures from recent U.S. sanctions targeting the banking sector and geopolitical concerns following Russia's new hypersonic missile launch. By 0900 GMT, data from LSEG indicated the rouble was trading at 103.50 to the dollar, reflecting a 0.8% rise.

Nevertheless, it lingered near a two-year low, having reached 104.35 the previous Friday—a level not seen since March 23, 2022. In trade with the yuan, the rouble lost over 1%, touching 14.19, its weakest value since March 2022, and remained stable at 108.71 against the euro. Analysts from BCS brokerage anticipate potential verbal measures from the central bank and government to curb the currency's decline, which is exacerbating inflation and undermining existing monetary policies.

As the devaluation sparks a pro-inflationary cycle, financial authorities may opt for verbal interventions to stabilize the rouble in the long term. Further support could come from upcoming foreign currency sales by exporters in preparation for tax liabilities. Meanwhile, Brent crude, Russia's key export item, decreased by 0.56% to $74.75 following recent gains amid rising geopolitical tensions involving Western nations, Russia, and Iran.

(With inputs from agencies.)