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Russian Ruble Falls to Record Low as Moscow Mulls Capital Controls

Posted by Joseph Trevisani on Sep 30, 2014 3:14:00 PM

The American and European Union economic and financial sanctions against Russia for its activities in the Ukraine may force the government to institute capital controls to protect its bond and currency markets and that prospect in turn has sent the ruble careening lower.

The ruble fell as low as 44.4608 against the Bank of Russia's basket of dollars (55%) and euros (45%) in the New York trading after two officials said the government is considering temporary capital restrictions if currency outflows rise.  It had recovered to 44.2282 by midafternoon after the central bank said it is not considering cross-border capital controls. 

The ruble had dropped to a record 39.8456 versus the dollar today before rebounding to 39.6003.

Since the end of June the Russian currency has lost 18 percent against the U.S. dollar and 13 percent against the dollar/euro basket.

The yield on Russian 10-year bonds rose 6 basis points to 9.42 percent today but it had been has high as 9.90 percent last month before the current cease fire was signed with Ukraine.

 

Joseph Trevisani

Chief Market Strategist

WorldWideMarkets Online Trading

Charts: Bloomberg

rub sept 30

 rub usd sept 30

Rus 10 year

 

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