Russian ruble soars as volatile year draws to a close

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MOSCOW – The ruble strengthened sharply on Friday, approaching the 70 mark against the dollar as a highly volatile year drew to a close, with the final month of trading dominated by fears over the impact of a price cap. Western oil prices on Russia’s export earnings. At 07:55 GMT, the ruble was 1.8% stronger against the dollar at 70.87, recovering some ground from the eight-month low of 72.9175 hit in the previous session.

The ruble has lost around 13% against the dollar since the price cap on Russian oil exports went into effect on December 5, although analysts said the technical impact would be felt most strongly in January-February.

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It gained 0.4% to trade at 75.58 against the euro and firmed 2.9% against the yuan at 9.89.

The Ministry of Finance said on Friday that the maximum possible share of the Chinese yuan in its National Wealth Fund (NWF) had been doubled to 60% as it restructures its rainy day fund to reduce reliance on currencies of so-called « unfriendly » countries.

The resumption of imports, which collapsed following Russia’s dispatch of tens of thousands of troops to Ukraine as the West imposed sanctions and companies left the market, also contributed to the weakening of the ruble.

« Even in a pessimistic scenario, the current account surplus could remain at a historically high level, providing support for the rouble, » said Dmitry Polevoy, chief investment officer at Locko Invest.

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« Our estimates range from 67.4 to 81.1 per dollar on average in 2023. »

Brent crude, a global benchmark for Russia’s top export, rose 0.6% to $84.0 a barrel.

President Vladimir Putin this week delivered Russia’s long-awaited response to the price cap, signing an executive order that bans the supply of crude oil and petroleum products from Feb. 1 for five months to countries that abide by it.

Russian stock indexes were mixed.

The dollar-denominated RTS index rose 1.6% to 951.3 points. Russia’s ruble-based MOEX index was down 0.2% at 2,143.5 points.

Shares of toy retailer Detsky Mir fell to their lowest level since November 21, down 3.1% on the day, after the company’s shareholders agreed to restructure the business as a a split, as part of a reorganization that could see the company go private. (Reporting by Alexander Marrow; Editing by Alex Richardson and Krishna Chandra Eluri)