Russian Rouble Sets A New Record Low Due To Thin Offshore Trade

On Monday, the Russian rouble hit a new low in weak offshore activity, with local markets suspended for trading until at least Wednesday.

According to Refinitiv data, the rouble fell to 133.5 per dollar after closing at 121.037 on Friday. The rouble fell as low as 141.00 to the dollar on the EBS trading platform.

Bid/offer spreads were between 10 and 15 cents, indicating a market that is becoming increasingly illiquid.

The MOEX Moscow exchange will be closed for business until Wednesday due to a bank holiday.

After the beginning of the year, the rouble has lost more than 40 per cent of its value versus the dollar, with losses intensifying since Russia invaded Ukraine on February 24, prompting broad sanctions from Western capitals.

The sanctions imposed on Russia, its lenders, corporations, and important persons, as well as Moscow’s retaliatory actions, have pushed Russian assets out of global financial markets and made it difficult for investors to trade any securities.

“It has become very difficult to trade the rouble after the sanctions,” said Aaron Hurd, senior portfolio manager, currency, at State Street Global Advisors. “Liquidity has vanished and markets have become very volatile.”

Russia calls its invasion of Ukraine a “special operation.”

On the Moscow Stock Exchange, stocks were last traded on February 25.

According to statistics from IHS Markit, five-year credit default swaps in Russia, which indicate the cost of insuring exposure to the country’s sovereign debt, hit a new high of 2,619 basis points, up from 1,725 basis points on Friday.

Trades in Russia’s sovereign dollar and euro debt have all but ceased, with certain issues trading at about 20 cents in the dollar or euro.

“With Russian prices on the euro bond somewhere around 20, this is going to go on for a long, long time, and nobody wants to be associated with (the rouble),” said Gabriel Sterne, head of global EM research at Oxford Economics.

“Just sell it and take a loss. You have to interpret the price movements as: there’s almost infinite supply and very little demand for these assets at the moment. It’s now just a matter of orderly disposal of Russian assets.”

The one-week and one-month implied volatility gauges for the rouble – a measure of demand for options on the currency increasing or falling versus the dollar – have remained near record highs set last week, with the one-week gauge above 84 per cent and the one-month gauge over 94 per cent. ,

The rouble’s depreciation has had an impact on trade volumes. In comparison to the end of February, turnover on the Russian currency on EBS plummeted by more than 80 per cent on Friday.

(Adapted from

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