Rouble hits over three-week low vs dollar after Moscow drone attack

The Russian rouble hit a more than three-week low against the US dollar on Monday as a favourable tax period passed and after drone attacks in the heart of Moscow damaged two office buildings in the Moskva-Citi business district.

Russia’s Defence Ministry said it had brought down three Ukrainian drones early on Sunday in the second such attack in a week.

Kyiv typically does not claim responsibility for specific incidents on Russian territory. Nobody was hurt and there was only minor damage.

At 0733 GMT, the rouble was 0.1% weaker against the dollar at 91.82, earlier falling to 92.7725, its weakest point since July 6.

It had lost 0.3% to trade at 101.25 versus the euro and had shed 0.3% against the yuan to 12.83.

The rouble has been weakening this year as exports fall and imports recover. It hit a more than 15-month low in early July as pressure increased sharply following an abortive armed mutiny by the Wagner mercenary group in late June.

Finance Minister Anton Siluanov, blaming the rouble’s recent weakness on Russia’s trade balance, on Monday said the predictability of the exchange rate was very important.

Brent crude oil, a global benchmark for Russia’s main export, was down 0.1% at $84.90 a barrel.

In the last week, the rouble has been unable to take advantage of higher oil prices, which have hit more than three-month highs.

Rouble falls past 91 vs dollar to over 1-week low as tax period ends

The currency has now lost support from a favourable month-end tax period, which usually sees exporters convert foreign currency revenues to pay local liabilities.

Russian stock indexes were higher, helped by high oil prices and, in the case of the rouble-based MOEX Russian index , the weaker rouble.

The MOEX was 1.2% higher at 3,045.8 points, its strongest point since before Russia invaded Ukraine in February 2022.

The dollar-denominated RTS index was up 1.1% to 1,045.2 points.

“Despite the new drone attack on Moscow, positive sentiment will likely remain this week, but we see risks of a correction in August, the trigger for which could be rouble revaluation, further bond falls or the worsening geopolitical situation,” said Sinara Investment Bank.