The Central Bank explained the reasons for the sharp weakening of the ruble at the end of last year

“Temporary factors”, including a decrease in exporters’ foreign exchange earnings and an increase in demand for foreign currency from bidders, caused the ruble to weaken. This is stated in the “Overview of the risks of financial markets” of the Bank of Russia (.pdf).

“In the last days of December, against the background of the increased need of credit institutions to regulate open currency positions, the demand for CNY / RUB swap increased, which led to a surge in the cost of attracting liquidity in yuan,” the analytical material says.

Among the consequences of the weakening of the ruble, the regulator also recorded a decrease in the RTSI index in December against the US dollar (by 13.7%). At the same time, against the backdrop of the weakening of the national currency, there was a “significant increase” in trading volume.

“Also, at the end of the year, the process of converting foreign currency deposits into rubles accelerated, which led to an increase in the demand of banks for foreign currency in order to compensate for the impact on the open foreign exchange position,” the review states. The depreciation of the ruble slowed down on December 15, when individuals sold through the largest Russian banks “toxic” currency for a total of 25.8 billion rubles.

In December 2022, the exchange rate of the ruble weakened relative to previous months. For example, on December 22, trading on the Moscow Exchange began with a sharp weakening of the Russian currency: by 12:40 Moscow time, the US dollar reached 72.63 rubles. (maximum value since April 2022).

The current dollar and euro rates, as well as quotes of the main indices and stocks on the Moscow Exchange are available at special page.

Andrey Sapozhnikov