Ruble rally comes to a halt

The Russian currency continued to fall on Wednesday, falling to its lowest levels since late May against the US dollar and the euro.

The ruble was 4.5% weaker against the greenback at 63.90 after touching 64.95, its weakest point since May 30. It lost 3.5% against the euro, falling to a five-week low.

The ruble hit a seven-year high against the majors a week ago but has since lost over 20% amid fears its strength could hurt Russia’s export income of commodities and other commodities valued in dollars and euros.

Experts say if the ruble’s three-day slide continues, it could ease pressure on Russia’s central bank to cut interest rates and relax capital controls in a bid to keep foreign exchange trading in ranges wanted by policymakers. A strong ruble could be bad for Russia’s budget, which receives significant energy tax revenues in foreign currency but spends them in rubles.

The president of the Russian financial markets association ACI, Evgeny Yegorov, expressed confidence that the current exchange rate of the ruble is strong. He told RIA Novosti that although the ruble has lost more than 15% in value over the past three sessions, volatility remains so high that the likelihood of the ruble strengthening or weakening against the dollar is about the same.

The ruble fell to a record low in March due to pressure from Western sanctions but recovered dramatically. The Russian currency rose 143% between early March and late June and was named the world’s best-performing currency this year by Bloomberg.