The Business Times

Russian rouble weakens after Moscow suspends Black Sea grain deal

Published Mon, Oct 31, 2022 · 05:54 PM

THE Russian rouble weakened as trading opened on Monday (Oct 31) in the first session since Moscow said it would suspend participation in the landmark Black Sea grain deal over the weekend.

The UN-brokered grain corridor deal, which helped to unlock Ukrainian exports from its southern ports, was the most significant diplomatic breakthrough so far in the eight-month conflict.

At 1020 GMT, the rouble had fallen by 0.6 per cent against the US dollar to 61.85, and by 0.3 per cent to 61.24 versus the euro.

Against the Chinese yuan, the rouble was off 0.3 per cent at 8.43.

Global food prices climbed on Monday after Russia said it was suspending participation in the grain deal for an “indefinite term”, after what it said was a major Ukrainian drone attack on its Black Sea fleet in Crimea.

Kyiv and the West criticised Russia’s decision to ditch the deal, and analysts warned it could cause another spike in global food prices.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

VIEW ALL

Also weighing on the rouble was a 1.2 per cent decline in the price of Brent crude oil, a global benchmark for Russia’s main export, to US$94.65 a barrel.

Monday represented the final day of a domestic month-end tax period, which usually provides some support to the rouble. It was also the day the first full session after the central bank ended its rate-cutting cycle on Friday, and said that Moscow’s “partial mobilisation” drive would be inflationary over the medium-term.

“The end of the tax period and large dividend payments, coupled with a further decline in Russia’s trade balance, is likely to send the rouble in the direction of 65 (against the US dollar) by the end of the year,” wrote Dmitry Polevoy, investment director at Moscow-based broker Locko Invest.

Russian stock indexes were mixed on the currency effect.

The dollar per cent was up at 2,173.5 points. REUTERS

KEYWORDS IN THIS ARTICLE

READ MORE

BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to  t.me/BizTimes

Banking & Finance

SUPPORT SOUTH-EAST ASIA'S LEADING FINANCIAL DAILY

Get the latest coverage and full access to all BT premium content.

SUBSCRIBE NOW

Browse corporate subscription here