The Russian ruble hit a new record low against the dollar on Friday, hurt in part by companies' foreign debt repayments, while shares in conglomerate Sistema plunged after another twist in a criminal investigation into its chairman.
The Russian currency has touched several historic lows in the past few months as investors in Russian assets have taken fright over the Ukraine crisis and as prices of oil, a major Russian export, have fallen below $100 a barrel. By 09:25 GMT, the ruble was 0.97 percent weaker against the dollar at 38.86 after reaching a low of 38.97. It was down 0.87 percent versus the euro at 49.52. That left the currency 0.92 percent weaker at 43.66 against the dollar-euro basket, which the Central Bank uses to gauge the ruble's nominal exchange rate.
"A combination of factors are pressuring the ruble. Firstly, dollar appreciation against developed and emerging market currencies, and secondly Russian corporates and banks are de facto shut out of foreign capital markets," said Maxim Korovin, a forex analyst at VTB Capital in Moscow. Korovin said the second factor — resulting from Western sanctions on Russia restricting access to Western financial markets — was exerting a constant drag on the ruble as many Russian companies were having to buy foreign currency to meet external debt repayments. They were also unable to attract new funding in foreign currencies due to sanctions over the Ukraine crisis.
Moscow-listed shares fell, meanwhile, with the market mood soured by a Russian court's decision to seize conglomerate Sistema's shares in oil company Bashneft as part of a criminal investigation. Hopes of a rollback in the West's sanctions on Russia had fueled market optimism in recent days but were fading on Friday after EU diplomats downplayed the likelihood of an immediate easing. A draft law submitted to the Russian parliament on Wednesday that would give Russian courts the right to seize foreign assets on Russian territory has also dampened sentiment.
INC News, 26/09/2014
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