Russian Rouble Weakens After News of Navalny's Death
The Russian rouble experienced a decline on Friday following the announcement by the federal prisons service that imprisoned opposition politician Alexei Navalny had passed away. The currency was also affected by the central bank's decision to maintain its key interest rate at 16%. Immediately after the Federal Penitentiary Service revealed that Navalny "felt unwell" and "almost immediately lost consciousness" after a walk, the rouble dropped to 93 against the dollar. This marks the currency's lowest level since January 4th, with the exception of a brief drop on February 9th caused by a trading error.
Central Bank's Rate Decision Contributes to Rouble's Weakening
Before Navalny's death was officially declared, the rouble had already weakened as the central bank chose to keep borrowing costs unchanged amid persistent inflation pressure. Governor Elvira Nabiullina is expected to provide further details on monetary policy and other matters during a news conference scheduled for 1200 GMT. The currency was 0.6% weaker against the dollar at 92.81 by 1141 GMT. It also lost 0.3% against the euro, trading at 99.64, and 0.2% against the yuan, reaching 12.76.
Analysts Predicted Rate Hold, Limited Impact on Rouble Rate
Mikhail Vasilyev, the chief analyst at Sovcombank, stated that the central bank's decision aligned with market expectations and is therefore unlikely to have a significant impact on the rouble rate. All 23 analysts surveyed by Reuters predicted that the rate would remain unchanged. Despite the rouble's recent decline due to the state's reduced daily foreign exchange (FX) sales, it is expected to receive a boost later in the month as exporters convert their foreign currency revenues in order to pay taxes.
Russian Stock Indexes Also Slide
In addition to the weakening rouble, Russian stock indexes experienced a decline as well. The dollar-denominated RTS index fell by 0.8% to 1,104.9 points, while the rouble-based MOEX Russian index was 0.3% lower at 3,255.8 points. Furthermore, the price of Brent crude, a key export for Russia, dropped by 1% to $82.03 per barrel.
Analyst comment
Negative news. The market is expected to face downward pressure as the Russian rouble weakens due to the death of opposition politician Alexei Navalny and the central bank’s decision to maintain a high interest rate. Additionally, the rouble has lost support from reduced FX sales, and the global benchmark for Russia’s main export, oil, is also down. Russian stock indexes are lower.
