Russian ruble hits lowest level against dollar since March 2022

Russian ruble hits lowest level against dollar since March 2022
by AFP Staff Writers
Moscow (AFP) Nov 22, 2024

The Russian ruble slumped on Friday to its lowest level against the US dollar since March 2022, a day after Moscow fired a hypersonic missile on Ukraine and Washington sanctioned a key Russian bank.

The Russian currency has been highly volatile throughout Moscow's near three-year military offensive on Ukraine, reacting dramatically to developments on the battlefield and Western sanctions.

The central bank set its official exchange rate for the ruble at 102.58 against the US dollar, data published on its website showed, the lowest level since 24 March 2022, a month after the start of the conflict.

The latest lurch lower came hours after Russian President Vladimir Putin said Moscow had fired a new generation hypersonic missile at Ukraine.

The Kremlin leader implied the new missile was nuclear-capable and said Moscow saw the United States and its European allies as legitimate targets.

Threatening "decisive" retaliation to any further escalation, Putin said the Ukraine conflict had taken on "elements of a global character."

Analysts said the currency had been hit hard by the United States on Thursday announcing sanctions on Russian lender Gazprombank, widely used to handle Moscow's international energy payments.

"There is a significant risk that the weakening of the ruble will continue," said Yevgeny Kogan, a professor at Moscow's Higher School of Economics.

Sanctioned Russian banks cannot conduct any transactions that touch the US financial system in any way.

Such is the importance of access to the US that even non-Western banks and companies typically automatically halt deals with sanctioned entities.

"Eventually new international payment chains will be built, but until that process is completed, export revenues may temporarily decline. So the ruble is likely to depreciate in the coming months," Kogan added in a post on Telegram.

Before launching its full-scale offensive on Ukraine, the Russian currency traded at around 75-80 against the US dollar.

The official rate, set by the central bank and based on trading data, fell to a record low of 120 in March 2022, before starting to recover.

Russia's ability to redirect its crucial oil and gas exports away from Europe has provided support to the ruble throughout the conflict.