Rouble plummets amid low oil prices and market turmoil

May 23rd, 2012 | By | Category: Rouble News

The Russian rouble and stocks plummeted today (Wednesday, capsule May 23rd) amid drops in oil prices and turbulent market conditions.

At 13:00 GMT, store the rouble was off 1.2 per cent against the dollar to RUB31.56 according to data from Dow Jones, while the Micex index was down nearly three per cent to 1263.88. The rouble rate was the weakest seen since late in January.

Stanislav Yarushevichus, head of currency trading at ING in Moscow, told the news agency: “The rouble should have fallen to these levels earlier, but exporter foreign currency sales were propping it up.” He explained that exporters have been buying roubles in order to meet end-of-month tax payments, but that this factor is no longer supporting the Russian coinage.

Meanwhile, oil prices are hovering around $107 a barrel for Brent crude, down from just under $120 a barrel recorded earlier this month. Costs fell thanks to the expected agreement between Iran and the UN nuclear watchdog, which has calmed fears of an interruption in oil supplies.

A government reshuffle within the cabinet and presidential administration has also had a negative impact on Russian investment options, with investors concerned that the recent appointments of career bureaucrats and government loyalists will do little to help with economic reforms and the creation of a forward-thinking Russia.

Also speaking to Dow Jones, Chris Weafer, chief strategist at Troika Dialog, noted: “Investors are still digesting the political and economic news of the past two days, or perhaps … they are somewhat underwhelmed by domestic news flow.”

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