Rouble Still Above $100, Weakening Trend Seen

The rouble held above 100 against the dollar on Wednesday after weakening to a record low of 117 in other markets post-Russia's trading hours in the previous session.

While the rouble's volatility has been high since it attacked Ukraine, which is the most significant assault on a European state since World War Two, the aggressive Western Sanctions in response have weakened the Russian currency and hurt ordinary citizens' daily lives.

The rouble plunged nearly 30% to an all-time low versus the dollar after Western-led political, strategic, economic and corporate sanctions were unprecedented in their extent and coordination.

While the currency has recouped some of those losses as Russia's central bank raised its key rate to an unprecedented 20 per cent and announced capital controls, it was still trading above 100 per dollar on Wednesday.

A decision by Western allies on Saturday to block "selected" Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) payments system will inflict a crippling economic blow to Russia, slowing trade and making transactions costlier.

They are likely to hurt the supply of essential goods in Russia, which will reduce living standards in Russia and push already high inflation further up.

With the Russian central bank curbed from intervening in currency markets due to the sanctions, authorities ordered exporting companies to sell over three-fourths of their foreign exchange revenues on the market. The president announced a ban on exporting cash in foreign currency over $10,000 from Wednesday.

Still, the rouble held above 100 per dollar, well below the 75 against the dollar it was trading before the Ukraine conflict started last week.

Oil prices surged past $110 per barrel as investors worried about the impact of aggressive sanctions against Russia and are likely to weigh on the rouble further.

"We think that there is some room still for oil prices to continue to climb," Carlos Casanova, senior Asia economist at UBP in Hong Kong, told Reuters. 

"So much of it depends upon political factors and making sure that some of the supply coming out of Russia is offset with (not just) more oil from U.S. shale, but also Iran," he added.