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© Reuters. FILE PHOTO: Russian rouble and U.S. dollar banknotes are seen in this illustration photo taken March 10, 2023. REUTERS/Dado Ruvic/Illustration/File Photo

The Russian rouble fell past the psychologically key 100 per U.S. dollar threshold for the first time since March last year on Monday.

President Vladimir Putin’s economic advisor said Russia was interested in a strong rouble and that loose monetary policy was the main reason behind the currency’s weakness. It has lost around 30% versus the dollar this year.

Below are comments from analysts at international banks and asset management firms.

VIKTOR SZABO, PORTFOLIO MANAGER, ABDRN

“We are clearly seeing the weakening of the external balances that has been happening as a result of all the sanctions.”

“They are still exporting the hydrocarbons but they are not what they used to be and the war in Ukraine is eating up a lot of resources.”

MICHAEL WANG, DEPUTY PORTFOLIO MANAGER, MIRABAUD ASSET MANAGEMENT

“The rouble has been underperforming all this year, partly on lower oil revenues but also because of capital flight. The most recent leg weaker was likely triggered by the central bank’s announcement last week that it would stop buying foreign currency on the domestic market.”

TIMOTHY ASH, SENIOR EM SOVEREIGN STRATEGIST, BLUEBAY ASSET MANAGEMENT

“Wonder when (central bank governor) Nabiullina will get the sack?”

The rouble’s fall “is being driven not only by lower energy receipts due to the loss of the bulk of the European gas business but also by the success of the G7 oil price cap, the much higher cost of imports due to sanctions and then continued capital flight.”

“The response will likely be higher policy rates and capital controls which will mean higher inflation, and ultimately lower growth.”

PIOTR MATYS, SENIOR FX ANALYST, IN TOUCH CAPITAL MARKETS, POLAND.

“The rouble remains under the selling pressure in the current global environment dominated by concerns about China, which is Russia’s most important trading partner.”

“The sharp fall in Russia’s current account surplus leaves the rouble more vulnerable to global sentiment. The CBR (Russian central bank) may have to raise interest rates further to cool down domestic demand and slow down imports to stabilize the rouble.”

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