Urgent: The dollar crushes this currency

 Urgent: The dollar crushes this currency

The drums of war are louder and fears are growing over the imposition of harsh sanctions on Russia, in light of the worsening situation with neighboring Ukraine. It looks like the Russian ruble is going through tough times on the other side, which prompted the Russian powerhouse to make an urgent decision to prevent the fluctuation of the currency.

ruble now

The ruble fell during Monday's trading at the highest rate against the US dollar since trading on October 28, 2020. The ruble then fell more than 2.48%, reaching levels of 77.3059 rubles/dollar.

The ruble was seen in early trading today, Monday, and ahead of the central bank's decision, a sharp decline in the range of 5%, down to the levels of 76.9856 rubles/dollar. While the ruble, after the decision of the Central Bank, reduced a small part of its losses, to record a decline in the order of 2.23%, to the levels of 79.1831 rubles/dollar.

Regarding the transactions of the dollar index on the world market, the main dollar index rose within the limit of 0.44% to exceed the levels of 96 points. The dollar's gains come ahead of the US Federal Reserve's interest rate decisions, which are expected to rise next March, while some expect a slight increase this week.

emergency decision

The decline of the ruble caused the Central Bank of Russia to decide to stop the purchases of foreign currencies by the central bank. The Bank of Russia says it aims to reduce volatility in financial markets, as the ruble has been hit by rising tensions between Russia and the West.

And in the statement:

The Bank of Russia said it had halted its purchases of hard currency in a bid to ease pressure on the ruble, which has fallen amid tensions over Ukraine. Policymakers have suspended foreign exchange purchases on the open market to "reduce financial market volatility", according to a statement posted on the central bank's website.

The Central Bank performs transactions for the Ministry of Finance as part of Russia's fiscal base, which aims to reduce the economy's exposure to fluctuations in oil prices.

More details

The latest break comes amid growing tensions with the West over a Russian troop buildup near the border with Ukraine. The last time the central bank stopped buying was more than two years ago when the coronavirus pandemic first spread, causing markets to tumble globally.

While President Vladimir Putin has repeatedly said Russia has no plans to invade, domestic markets plummeted on Monday after the United States ordered family members of his embassy in the Ukrainian capital to leave.

"The central bank does not want regular currency purchases linked to the fiscal base to be an additional source of selling pressure on the rouble," said Piotr Matys, chief currency InTouch Capital Markets Ltd is a London-based analyst.

“Unless investors see concrete steps to defuse and withdraw Russia or at least reduce its forces on the border with Ukraine, the path of least resistance should remain on the upside of the US dollar against the Russian ruble. Mattis added.

reservations

It is reported that in times of high oil prices, the Russian Central Bank buys foreign currency to shore up its reserves. Purchases are made for the equivalent of 36.6 billion rubles ($463 million) per day.

Reserves of the Russian Central Bank have recently seen, including the state wealth fund, reach over $600 billion.

Urgent The dollar crushes this currency