The ruble fell to a record low in Moscow, and remains volatile outside Russia

Russian ruble coins are seen in front of US dollar banknotes in this illustration taken on February 24, 2022. REUTERS/Dado Ruvic/Illustration/Files

NEW YORK (Reuters) – The ruble touched a record low of 110 per dollar in Moscow on Wednesday and crawled back near 100 on other trading platforms, although it remained under pressure as Russia’s financial system teetered under the weight of Western sanctions. Imposed due to the invasion of Ukraine.

The Russian stock market remained closed and bond trading showed wide margins in supply and demand and little or no volume.

The ruble fell 4.5 percent to 106.02 against the dollar in Moscow trading, hitting 110.0 earlier, a record low. It has lost 30% of its value against the dollar since the beginning of the year. Against the euro, it was down 2.5% on Wednesday to end the day at 115.40.

But trading outside of Russia saw the currency rebound to end the day up 6% to 100 on the EBS platform and 7.6% at 97.6 elsewhere.

The coin is still more than 20% weaker than when it traded during the first half of February.

On the EBS platform, this week the ruble had the three largest daily ranges since 2010, with Monday being the widest range recorded.

“Who knows what’s going to happen tomorrow,” said Colin Stewart, head of the Americas division at Quant Insight in New York.

“She’s just too volatile.”

Russia responded to the currency weakness by more than doubling the benchmark interest rate to 20% and telling companies to remit 80% of their foreign exchange earnings into the domestic market as the central bank, now under Western sanctions, halted foreign exchange. Interventions.

A weaker ruble will affect living standards in Russia and encourage already high inflation, while Western sanctions are expected to lead to shortages of basic goods and services such as cars or flights. Read more

Several global companies have announced plans to exit Russia, while the country’s credit ratings are under pressure as a result of the crisis.

Credit rating agency Moody’s said it was reviewing Russia’s rating in order to downgrade, a move that “reflects the negative credit effects on Russia’s credit profile from additional and more severe sanctions being imposed.”

JPMorgan said about $4.2 billion of Russian debt is at risk of being expelled from investment-grade bond indexes.

Meanwhile, Scope Ratings said capital controls “raise important questions about the Russian state’s willingness to service its debt to foreign residents” a day after it downgraded Russia’s rating to junk.

Scope added that the measures make Russia “more vulnerable to banking and liquidity crises.”

In a separate note, JPMorgan said a deep recession is in the making for Russia and that the bank is reassessing its regional macro outlook.

“The latest actions targeting CBR have completely changed the picture,” JPMorgan said.

“The large Russian current account surplus could have accommodated large capital outflows, but with the accompanying CBR and SWIFT sanctions, on top of existing restrictions, Russian export earnings are likely to be disrupted, and capital outflows are likely to be immediate.”

Several Russian banks have been banned from the global financial network SWIFT, which facilitates interbank transfers.

As households and businesses in Russia rush to convert the plunging ruble into foreign currency, banks have raised rates for foreign-currency deposits to attract those inflows.

Russia’s largest lender Sberbank (SBER.MM) It offers to pay 4% on deposits up to $1,000, while the largest private bank Alfa Bank is offering 8% on dollar deposits for three months. For ruble deposits, Sberbank offers an annual return of 20%.

Sberbank said on Wednesday it had pulled out of almost all European markets, blaming large cash outflows and threats to its employees and property, after the European Central Bank ordered the shutdown of its European arm. Read more

The bank’s London-traded shares fell to 4.5 cents from $16 at the start of the year.

US-traded exchange-traded funds (ETFs) of Russian companies and others heavily exposed to Russia tumbled 13% on Wednesday, down 72% since mid-February.

Moscow describes its actions in Ukraine as a “special operation” that it says is designed not to occupy territory but to destroy its neighbor’s military capabilities and arrest what it considers dangerous nationalists.

Reporting by Reuters. Editing by Jane Merriman, Jonathan Otis and Grant McCall

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