2023-06-12 22:55:09
The Russian currency fell to 83.8411 rubles to the dollar on Monday. Maxim Kapliuk / stock.adobe.com
The Russian currency fell to 83.8411 rubles to the dollar on Monday. The deterioration of the trade balance affects the country’s foreign currency reserves, which contributes to undermining its currency.
The ruble fell Monday, June 12 to its lowest level in 13 months against the dollar, reflecting a deterioration in the country’s trade balance, under the effect of the war in Ukraine and the sanctions imposed on Russia. The Russian currency fell to 83.8411 rubles per dollar. Around 10:15 p.m. French time, it stood at 83.7766 rubles for a greenback, down 1.24%.
The Russian Central Bank (BCR) indicated on Friday that the balance of current transactions with the exterior, which takes into account all trade with foreign countries, had posted a surplus of 22.8 billion dollars over the period from from January to May, a contraction of 81% over one year.
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“Oil is a problem”
For Adam Button of ForexLive, “oil is a problem for russia“, due to the fall in prices, which affects the world’s leading exporter of crude oil and refined products combined. This plunge in crude oil prices, which are more than 40% below their 2022 level at the same stage, is explained by questions about the strength of demand, against a backdrop of economic slowdown, but also by fears of too much supply.
Oil prices also fell sharply on Monday, still under the influence of a series of disappointing indicators. The price of a barrel of Brent North Sea oil for August delivery fell 3.94% to close at $71.84. Its American equivalent, the West Texas Intermediate (WTI) maturing in July, lost 4.34% to 67.12 dollars. In session, the reference price of WTI fell to 66.80 dollars, the lowest in six weeks.
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Although it had pledged in February to reduce its production by some 500,000 barrels per day, Russia continued to massively export black gold, to the point of rocking the entire OPEC+ cartel, made up of Organization of the Petroleum Exporting Countries (OPEC) and its allies of the agreement reached in 2016.
Lack of transparency
For Adam Button, the lack of transparency from Russia, which stopped publishing official data on its oil and gas production at the end of April, undermines the credibility of the entire alliance, which contributes to lower prices and indirectly penalizes Russia’s export revenues.
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Russia’s deteriorating trade balance is affecting the country’s foreign currency reserves, which is helping to undermine its currency. Imports become more expensive, which fuels inflation. On Friday, the President of the BCR spoke of the rise in inflation, fueled, according to her, by the trade balance, but also by the acceleration of public spending as well as tensions on the labor market, which is experiencing a shortage of partly war-related labor.
Elsewhere on the foreign exchange market, the euro rose slightly by 0.09% against the greenback, to 1.0759 dollars for one euro, against a backdrop of wait-and-see attitude at the start of a week marked by a series of decisions of central banks.
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