Mercenaries led by Yevgeny Prigozhin withdrew from the southern Russian city of Rostov-on-Don overnight on Saturday under a deal that halted their rapid advance on Moscow but left questions about President Vladimir Putin‘s grip on power.
The rouble, under support from month-end tax payments that typically see exporters convert foreign currency revenues to meet local liabilities, was 0.5% stronger against the dollar at 84.29 by 1103 GMT, recovering after hitting 87.2300 in early trade, its weakest point since March, 2022.
It had gained 0.5% to trade at 91.92 versus the euro and firmed 0.6% against the yuan to 11.63 , also recovering after hitting its lowest in more than two months against both currencies.
Monday’s initial drop came as demand for foreign currency shot up over the weekend, when Russian banks had offered exchange rates well above the official rate beyond 90 to the dollar.
First Deputy Prime Minister Andrei Belousov said demand for foreign currency had increased sharply in about 15 regions.”On average, it was about 30%, but most active growth in demand for cash was recorded in southern regions – in Voronezh, Rostov and Lipetsk, as well as in large cities,” Belousov said. “Demand there increased by about 70-80%.”WEEKEND SELLOFF
Analysts said domestic politics were to blame, with Alexey Antonov of Alor Broker warning that although the peak of tensions had passed, an “unpleasant residue” would linger for some time.
“The rouble in the cash market sold off sharply on Saturday with buy/offer spreads widening out substantially,” said Goldman Sachs in a note.
But Russian authorities have plenty of resources to support the currency, Goldman Sachs said, viewing fiscal finances as the most important determinant of the currency’s moves. “Should the response to the events over the weekend be additional spending, we think this would be followed by a weaker rouble.” Reuters