At 8.30am, the ruble was more than 10% weaker against the dollar at 117.5 and had lost over 7% against the euro to trade at 124.1 on the Moscow Exchange, marking the first time the ruble has traded above 110 to the dollar in Moscow.
The Russian central bank imposed a 30% commission on foreign currency purchases by individuals on currency exchanges – a move brokers said appeared designed to curb demand for dollars – but that did little to halt the ruble’s slide.
Russia’s financial markets have been thrown into turmoil by sanctions imposed over its invasion of Ukraine, the biggest attack on a European state since World War II.
Russia calls its actions in Ukraine a “special operation” that it says is not designed to occupy territory but to destroy its southern neighbour’s military capabilities and capture what it regards as dangerous nationalists.
Since Russian troops entered Ukraine on Feb 24 the ruble is down close to 30% against the dollar, and analysts said today it would probably remain highly volatile.
The government has ordered Russian exporters to convert 80% of their forex revenues into rubles to support the local currency, but people are still queuing up at banks to buy dollars as the ruble slumps.
Trading on the Moscow Exchange’s stock section remained largely closed tosday, a fourth day of restrictions ordered by the central bank.
Overnight, Fitch said that US and European Union sanctions prohibiting any transactions with the Bank of Russia would have a “much larger impact on Russia’s credit fundamentals than any previous sanctions”.
Moody’s said the severity of the sanctions “have gone beyond Moody’s initial expectations and will have material credit implications”.
S&P lowered Russia’s rating to sub-investment grade last week.
Russia’s invasion of Ukraine and the sanctions imposed in response have led to dire warnings about the Russian economy, with the Institute of International Finance predicting a double-digit contraction in growth this year.
Yesterday, index providers FTSE Russell and MSCI said they would remove Russian equities from all their indexes, after a top MSCI executive earlier this week called Russia’s stock market “uninvestable”.