Russian Ruble Drops vs US Dollar due to Euro Crisis

Published: 3 Apr at 6 PM Tags: Euro, Dollar, America, Eurozone, Cyprus, USA, Italy, Russia,

Although Cyprus and the International Monetary Fund reached an agreement which will see the IMF bequeathing the struggling island nation 1 billion Euros, the stability of the Eurozone is far from assured.

In recent weeks the 17 nation currency bloc has battled a flood of concerns aside from the situation in Cyprus, including poor output and employment data and an uncertain political situation in Italy, and the troubles in the Eurozone have had globally reaching repercussions.

Today Russia’s currency experienced its most significant decline for three months as the latest bout of Euro-centric concerns triggered extreme capital outflow.

The Ruble slid by 0.7 per cent against the US Dollar as the ongoing Eurozone crisis led to net capital outflow in Russia (a nation which relies heavily on the Eurozone for trade) reaching $25.8 billion in the first quarter of 2012.

Remarks made by Russian Finance Minister Anton Siluanov served to weaken the currency further.

Siluanov stated that the Russian government may attempt to fill its Reserve Fund by purchasing foreign currency on the open market in the months ahead.

If purchases begin this year, and not in 2014/15 as previously expected, the pressure on the Ruble will increase, making it likely to continue falling.

The price of one of Russia’s primary sources of income, Brent oil, also fell by 0.9 per cent.

As one analyst observed: ‘It all came together: payment account data, the MinFin’s statement on market purchases of foreign currency and a general increase in panic selling from foreign players as the Ruble weakens.’

In light of this latest movement, the Ruble has now declined by 3 per cent against the US Dollar over the past three weeks.

As of Wednesday, 3rd April 2013, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1782, GBP USD exchange rate was 1.5134, and GBP RUB exchange rate was 47.72.

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