The Russian rouble has weakened against major world currencies due to falling global crude oil prices, worsening geopolitics and increased government foreign exchange purchases, financial analysts Andrey Smirnov and Igor Rastorguyev reported in statements published by news agency Prime.
Benchmark North Sea Brent crude oil has traded below 90 dollars per barrel in recent days. Declining commodity prices place direct downward pressure on the rouble while bolstering the strength of the US dollar.
Andrey Smirnov, a financial analyst and stock market expert at BCS World of Investments, stated that lower commodity quotes affect exchange rates in the short term through the actions of speculatively minded market participants.
BCS World of Investments is one of Russia's largest private financial brokerages and investment firms. Benchmark Brent crude oil, extracted from the North Sea, serves as the global price standard for international oil trade, making Russia's export-reliant economy and currency highly sensitive to changes in oil market prices.
Geopolitical Pressures and State Foreign Currency Buying
Smirnov also pointed to a cooling of geopolitical optimism as a major factor weighing on rouble assets. He stated that waning market expectations for a quick end to the war in the Middle East and a diplomatic settlement of the conflict in Ukraine have exerted broad pressure across rouble-denominated assets.
Increased activity by government authorities in the foreign exchange market has also driven the currency down, according to Igor Rastorguyev, lead analyst at brokerage company AMarkets.
Rastorguyev noted that between August 7 and September 4, daily purchases of foreign currency and monetary gold by the Ministry of Finance of the Russian Federation will increase by almost 20 percent to 6.5 billion roubles, up from 5.4 billion roubles per day in July.
The Russian Finance Ministry manages state fiscal policy and periodically conducts foreign currency and gold purchases under budget rules to build sovereign reserves and stabilize domestic finances. AMarkets is an international financial brokerage that provides online trading services across global asset classes, while news agency Prime is a leading Russian provider of financial and economic news.
Rastorguyev added that steady growth in demand for US dollars among the general population in recent times has further contributed to the strengthening of the American currency against the rouble.
