MOSCOW — The rouble soared in its final session of a volatile year on Friday, but remained on course for hefty losses in December, after fears over the impact of a Western oil price cap on Russia’s export revenues dominated this month’s trading.
The rouble has lost around 11% to the dollar since a price cap on Russian oil exports came into force on Dec. 5, although analysts said the technical impact will be felt more strongly in January-February.
By 1344 GMT, the rouble was 4% stronger against the dollar at 69.30, recovering ground from the eight-month low of 72.9175 hit in the previous session.
After slumping to a record low 120 per dollar in March soon after Russia shook markets by sending tens of thousands of troops into Ukraine, the rouble then spent most of the year as the world’s best-performing major currency, boosted by capital controls and collapsing imports, only losing the top spot this month.
The rouble had gained 3.4% to trade at 73.42 versus the euro .
It firmed 2.9% against the yuan to 9.89 after Russia said it had doubled the yuan’s maximum possible share in its National Wealth Fund (NWF) to 60% as it restructures its rainy-day fund to reduce dependency on currencies from so-called “unfriendly” nations.
Russia is not chasing a specific rate, Finance Minister Anton Siluanov said on Thursday, but wants stability.
“It is important for us to have predictability and stability of exchange rate fluctuations,” Siluanov said in an interview broadcast on state TV channel Rossiya-24.
“(Recent volatility) was happening under extreme sanctions pressure, but now, thank God, the rate has stabilized,” he said.
The rouble has endured three of its four biggest monthly declines this year since 2015, in February, July and now December. This year has been the rouble’s most volatile since the domestic debt default in 1998.
Other government officials have made it clear that a weaker rouble, in the 70-80 range, is beneficial as Russian exports fall.
Recovering imports, which collapsed after the West imposed sanctions and companies left the market, have also contributed to the rouble’s weakening of late.
“Even in a pessimistic scenario, the current account surplus could remain at a historically high level, providing the rouble some support,” said Dmitry Polevoy, head of investment at Locko Invest.
“Our estimates vary from 67.4 to 81.1 per dollar on average in 2023.”
Tinkoff Investments said the growing budget deficit and falling oil prices pose the biggest risks to the rouble in 2023, but that any decline will be gradual.
Brent crude oil, a global benchmark for Russia’s main export, was down 0.2% at $83.3 a barrel.
Russian stock indexes were mixed.
The dollar-denominated RTS index was up 4.2% to 976.1 points. The rouble-based MOEX Russian index was unchanged at 2,146.6 points.
Shares in Russia’s largest children’s toy retailer Detsky Mir slumped after its shareholders agreed to restructure the business through a spin-off that could pave the way for the company to become private.
(Reporting by Alexander Marrow; additional reporting by Vincent Flasseur; Editing by Alex Richardson, Krishna Chandra Eluri and Barbara Lewis)