- The aborted mercenary rebellion fuels the volatility of the Russian market
- The ruble hit a 15-month low against the dollar in early trade
- The Russian currency is recovering from reaching 87.23 against the dollar
- Analysts see continued pressure on the ruble
June 26 (Reuters) – The Russian ruble fell to its lowest level in nearly 15 months against the dollar in early trade on Monday before paring losses, as investors responded for the first time to an unknown insurrection by heavily armed mercenaries in Russia at the weekend.
By 1010 GMT, the ruble was 0.2% stronger against the dollar at 84.53, rebounding after hitting 87.2300 in early trade, its weakest point since March 2022.
It rose 0.3% to trade at 92.07 against the euro and increased 0.5% against the yuan to 11.66, also rebounding after hitting more than two-month lows against both currencies.
Mercenaries led by Yevgeny Prigozhin pulled out of the southern Russian city of Rostov-on-Don on Saturday night, under a deal that halted their rapid advance on Moscow but left questions about President Vladimir Putin’s grip on power.
“Politics once again has a negative impact on investors’ mood,” said Alexei Antonov of Allure Broker. “The peak of tensions has passed, but the unpleasant remnants will linger for some time.”
With the ruble not trading over the weekend, Russian banks offered exchange rates well above the official post-90 rate for the dollar, but those were gradually easing as tensions eased.
“The ruble in the money market sold off sharply on Saturday, with bid/offer spreads widening significantly,” Goldman Sachs said in a note.
But Goldman Sachs said that the Russian authorities have plenty of resources to prop up the currency, arguing that public finances are the most important factor in determining currency movements.
“If the response to the events over the weekend is to increase spending, we believe this will be followed by a weaker ruble.”
First Deputy Prime Minister Andrei Belousov said that the demand for foreign currency increased sharply over the weekend in about 15 regions.
“On average, it was about 30%, but the most active growth in cash demand was recorded in the southern regions – in Voronezh, Rostov and Lipetsk, as well as in large cities,” Belousov said. “Demand there has increased by about 70-80%.”
Investors globally have been watching the fallout from the aborted rebellion, with some expecting a move to safe havens such as US government bonds and the dollar.
Brent crude, a global benchmark for Russia’s main export, rose 0.4% to $74.17 a barrel.
Russian stock indices were lower.
Investment bank Senara said that “unexpected and dramatic events” that occurred on Friday night sparked selling, but the quick resolution of the situation over the weekend meant that another wave of selling was unlikely.
“Market participants may be cautious for some time,” Senara said.
The dollar-denominated RTS Index (.IRTS) fell 0.9% to 1,030.1 points. Russia’s ruble-based MOEX (.IMOEX) declined 1.1%, at 2,764.1 points.
Shares of most companies outperformed the main index after falling sharply in after-hours trading late on Friday.
Reporting by Alexandre Maru. Additional reporting by Karen Stroeker; Editing by Kim Coghill and Ed Osmond
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