Russia Scrambles to Defend Ruble Amid Capital Security Concerns
Wednesday,01/10/2014|11:35GMTby
George Tchetvertakov
The CBR is rumoured to be on the verge of implementing capital controls for the first time since 1998, as the country maintains its overwhelming dependence on lofty oil prices and artificial market controls in ruble flows.
The Central Bank of Russia (CBR) is being buffeted on several fronts this week as the bank struggles to contain rampant ruble speculation with rumours surfacing yesterday and today that the bank will implement capital controls to dampen the impact of significant capital flight from Russia in the near future. According to TASS news agency, the CBR is considering artificial currency management and capital controls.
Market speculation that the CBR is considering capital controls sent RUB currency pairs spiralling lower. Against the US dollar, the ruble reached a multi-year low of 39.77 before paring back some losses late in the Asian trading session on Wednesday. Against the euro, the ruble is trading above 50.00 for only the second time since late 2008.
Using the CBR's own valuation of the ruble compared to the basket of euros and US dollars, the ruble fell beyond the 44.40 level which the CBR references as the 'line in the sand' beyond which intervention will occur.
The CBR widened the ruble’s trading band in August of this year in preparation for a free-floating ruble next year - a policy shift that would make interest rates rather than reserve utilisation as the primary mechanism for controlling currency movements and managing inflation.
The ruble was also weaker after the CBR conducted its first overnight ruble-dollar swap operation to boost banking Liquidity . The CBR announced that the size of the ruble-dollar swap operation equalled $581 million. This was the first time the bank used this mechanism since its introduction on September 16th, 2014.
There's No Russia without Oil & Gas
In related news that affects both Russia, the US dollar and crude oil prices, the CBR has announced that it will assume an “oil price of $60 per barrel in its new stress scenario for monetary policy,” according to CBR’s First Deputy Governor, Ksenia Yudayeva.
"The purpose of this scenario is to prepare a shock scenario to work out an action plan which we would implement to limit negative effects," said Ms. Yudayeva.
Russian authorities are once again in a quandary as how to best to reign in speculative attacks on the ruble, support an ailing ruble bond market, as well as how to protect Russia's biggest source of revenue - raw material and commodity sales. As the ruble has been falling in value against the US dollar for almost the 11th week in a row, holders of ruble-denominated bonds are suffering twice over in terms of a depreciating currency and exposure to falling bond prices.
Russia is no stranger to capital restrictions caused by international financial effects. Russia first imposed restrictions on capital outflows in 1998 when the ruble's decline led to a default on sovereign ruble-denominated debt. Those capital controls were only removed in 2006. Implementing similar controls today risks damaging Russia's ambition to compete in the international financial markets without government assistance and with a free-floating currency.
The Central Bank of Russia (CBR) is being buffeted on several fronts this week as the bank struggles to contain rampant ruble speculation with rumours surfacing yesterday and today that the bank will implement capital controls to dampen the impact of significant capital flight from Russia in the near future. According to TASS news agency, the CBR is considering artificial currency management and capital controls.
Market speculation that the CBR is considering capital controls sent RUB currency pairs spiralling lower. Against the US dollar, the ruble reached a multi-year low of 39.77 before paring back some losses late in the Asian trading session on Wednesday. Against the euro, the ruble is trading above 50.00 for only the second time since late 2008.
Using the CBR's own valuation of the ruble compared to the basket of euros and US dollars, the ruble fell beyond the 44.40 level which the CBR references as the 'line in the sand' beyond which intervention will occur.
The CBR widened the ruble’s trading band in August of this year in preparation for a free-floating ruble next year - a policy shift that would make interest rates rather than reserve utilisation as the primary mechanism for controlling currency movements and managing inflation.
The ruble was also weaker after the CBR conducted its first overnight ruble-dollar swap operation to boost banking Liquidity . The CBR announced that the size of the ruble-dollar swap operation equalled $581 million. This was the first time the bank used this mechanism since its introduction on September 16th, 2014.
There's No Russia without Oil & Gas
In related news that affects both Russia, the US dollar and crude oil prices, the CBR has announced that it will assume an “oil price of $60 per barrel in its new stress scenario for monetary policy,” according to CBR’s First Deputy Governor, Ksenia Yudayeva.
"The purpose of this scenario is to prepare a shock scenario to work out an action plan which we would implement to limit negative effects," said Ms. Yudayeva.
Russian authorities are once again in a quandary as how to best to reign in speculative attacks on the ruble, support an ailing ruble bond market, as well as how to protect Russia's biggest source of revenue - raw material and commodity sales. As the ruble has been falling in value against the US dollar for almost the 11th week in a row, holders of ruble-denominated bonds are suffering twice over in terms of a depreciating currency and exposure to falling bond prices.
Russia is no stranger to capital restrictions caused by international financial effects. Russia first imposed restrictions on capital outflows in 1998 when the ruble's decline led to a default on sovereign ruble-denominated debt. Those capital controls were only removed in 2006. Implementing similar controls today risks damaging Russia's ambition to compete in the international financial markets without government assistance and with a free-floating currency.
FM's Editor-in-Chief Yam Yehoshua on how the newsroom evaluates stories.
FM's Editor-in-Chief Yam Yehoshua on how the newsroom evaluates stories.
FM's Editor-in-Chief Yam Yehoshua on how the newsroom evaluates stories.
FM's Editor-in-Chief Yam Yehoshua on how the newsroom evaluates stories.
Matthew Smith, Group CEO at EC Markets, speaking at FMLS:24
Matthew Smith, Group CEO at EC Markets, speaking at FMLS:24
Matthew Smith, Group CEO at EC Markets, speaking at FMLS:24
Matthew Smith, Group CEO at EC Markets, speaking at FMLS:24
Finance Magnates Annual Awards 2024 | FM Awards 2024 Highlights
Finance Magnates Annual Awards 2024 | FM Awards 2024 Highlights
🎥Catch the best moments from the Finance Magnates Annual Awards Gala Dinner!
An evening where top names in finance came together to celebrate achievements, enjoy live music, and connect over a memorable dinner. Watch the highlights and feel the energy of our first gala in Cyprus!
Congratulations to all the winners for their dedication to excellence and leadership in the financial industry, including XM, Trading PRO, FP Markets, Deriv, FxPro, LATAM, Headway, ATFX, FBS, AMEGA, EC Markets, Axi
For more information about the 1st Finance Magnates Annual Awards, visit https://bit.ly/3Zb7wNz
#FinanceMagnatesGala #IndustryExcellence #GalaHighlights #FinanceMagnatesAnnualAwards #FinanceMagnatesAwards #CelebratingSuccess #FinanceCommunity
🎥Catch the best moments from the Finance Magnates Annual Awards Gala Dinner!
An evening where top names in finance came together to celebrate achievements, enjoy live music, and connect over a memorable dinner. Watch the highlights and feel the energy of our first gala in Cyprus!
Congratulations to all the winners for their dedication to excellence and leadership in the financial industry, including XM, Trading PRO, FP Markets, Deriv, FxPro, LATAM, Headway, ATFX, FBS, AMEGA, EC Markets, Axi
For more information about the 1st Finance Magnates Annual Awards, visit https://bit.ly/3Zb7wNz
#FinanceMagnatesGala #IndustryExcellence #GalaHighlights #FinanceMagnatesAnnualAwards #FinanceMagnatesAwards #CelebratingSuccess #FinanceCommunity
FMLS:24 | Shaping the Next Era of Financial Evolution
FMLS:24 | Shaping the Next Era of Financial Evolution
Welcome to FMLS:24 – the premier event where influential brands and leaders in trading, payments, fintech, and digital assets come together!
Join over 2,500 industry professionals, engage with 150+ expert speakers, and discover endless opportunities with 70+ top exhibitors. FMLS:24 is where senior executives and decision-makers gather to close deals, forge new partnerships, and strengthen connections with long-term clients.
Whether you’re in finance, technology, or payments, this summit is your gateway to future growth, meaningful collaborations, and industry-leading insights.
👉 Don't miss out – secure your ticket now at https://events.financemagnates.com/ZQEYy0?utm_source=youtube&utm_campaign=fmls24-awareness&utm_medium=video&RefId=MLS%3A24+Video+Promo
#fmls #fmls24 #fmevents #financemagnates #forex #payments #crypto #events #london #fintech #ai #generativeai #technology #onlinetrading #forex #investing #investors #tech
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
👍 Facebook: https://www.facebook.com/FinanceMagnatesEvents
📸 Instagram: https://www.instagram.com/fmevents_official
🐦 Twitter: https://twitter.com/F_M_events
🎥 TikTok: https://www.tiktok.com/@fmevents_official
▶️ YouTube: https://www.youtube.com/@FinanceMagnates_official
Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Welcome to FMLS:24 – the premier event where influential brands and leaders in trading, payments, fintech, and digital assets come together!
Join over 2,500 industry professionals, engage with 150+ expert speakers, and discover endless opportunities with 70+ top exhibitors. FMLS:24 is where senior executives and decision-makers gather to close deals, forge new partnerships, and strengthen connections with long-term clients.
Whether you’re in finance, technology, or payments, this summit is your gateway to future growth, meaningful collaborations, and industry-leading insights.
👉 Don't miss out – secure your ticket now at https://events.financemagnates.com/ZQEYy0?utm_source=youtube&utm_campaign=fmls24-awareness&utm_medium=video&RefId=MLS%3A24+Video+Promo
#fmls #fmls24 #fmevents #financemagnates #forex #payments #crypto #events #london #fintech #ai #generativeai #technology #onlinetrading #forex #investing #investors #tech
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
👍 Facebook: https://www.facebook.com/FinanceMagnatesEvents
📸 Instagram: https://www.instagram.com/fmevents_official
🐦 Twitter: https://twitter.com/F_M_events
🎥 TikTok: https://www.tiktok.com/@fmevents_official
▶️ YouTube: https://www.youtube.com/@FinanceMagnates_official
Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!