The ruble has lost 3.8% in one day against the euro and the dollar. The dollar has already exceeded 60 (+1.83p) rubles while the euro has risen to 73.70 (+2.32p). In total, the ruble has lost 5.4% since the announcement of sanctions on Friday. Despite the shocking growth rates today, the major short-term mark of 65 rubles per dollar could become a serious barrier for the pair’s further growth.
It is unlikely that the ruble will continue to lose its value at such speed during the remainder of the week. Although the downward trend may continue, it will likely be at a slower pace. In fact, it is possible that the USDRUB pair’s decline to 65 may take a couple of weeks. The EURRUB is fast approaching the important round number of 75. However, further price movements in this pair will depend on whether the euro weakens against the dollar in the near future.
Unlike 4 years ago, the Russian currency will probably manage to avoid a collapse, as oil and the global economy are currently performing much better than in 2014. Nevertheless, the new round of sanctions will once again re-establish the hard link between the ruble and crude oil, which threatens to increase volatility and nervousness in the markets.
It is highly likely that the Russian government will try to save Russian companies affected by U.S. sanctions by providing official guarantees or even financial injections. The government is a large stakeholder in these companies and their protection is in its interests. The amount of aid provided would depend on the size of the stake the government holds in each company. It’s worth mentioning that the government is also interested in the high tax revenues it receives from said companies.
Russians could feel the consequences from sanctions soon, as consumer prices start to grow. The Russian economy will likely be supported by favourable oil prices and the macro economy in general.