The rouble has dropped to its lowest level in over 18 months against the dollar, influenced by the ongoing crisis between Israel and Gaza.
The value of the Russian currency declined beyond 102 following Israel’s declaration of war in response to severe attacks by Hamas.
This recent outbreak of violence, resulting in over 1,100 deaths since the weekend, has caused investors to shift from volatile assets to more stable ones like the dollar.
This is the rouble’s lowest value since March of the previous year. Notably, it plummeted to an all-time low of 121.5275 in the aftermath of Moscow’s invasion of Ukraine in February 2022.
Currently, the rouble has decreased 1.9% to stand at 107.76 against the euro, and it has fallen 0.6% to 123 against the pound.
On the other hand, the sterling’s value has dropped by 0.2% against the dollar today, having previously seen a dip of up to 0.6% in the increasing preference for the dollar.
Mohit Kumar, the chief European economist at Jefferies, believes the currency market fluctuations are primarily driven by “an escalating risk aversion due to Middle East tensions”.
When the rouble last hit triple-digit figures in August, it prompted the Bank of Russia to urgently raise the rate by 350 basis points to 12%. There were talks about bringing back measures to support the currency, but such interventions have been noticeably fewer this time. The rate increased to 13% in September.
In relation to Russia’s primary export, Brent crude oil, which is a worldwide benchmark, has seen a 3.4% increase, now priced at over $87 per barrel, influenced by the military unrest in the Middle East.
