May 31, 2022 05:05AM ET
By: AnalysisWatch
The Russian ruble crossed 61 against the dollar on Tuesday but soon fell back to 64 as capital controls provided support and the market was dragged down by fears of new European sanctions.
European Union leaders agreed in principle on Monday to cut oil imports from Russia by 90% by the end of the year and impose other sanctions, such as excluding Sberbank from the SWIFT transaction network, to punish Moscow for its intervention in Ukraine.
At 03:32 AM ET, the ruble was trading 1.5% weaker against the dollar at 63.09. On Wednesday, it hit 55.80 against the dollar, the highest level since February 2018, before falling to 66.70 by the end of the week.
Against the euro, the ruble fell 0.6% to 64.71 after hitting a seven-year high of 57.10 last Wednesday, as taxes due at the end of the month usually prompt export-oriented companies to convert foreign currency to meet their obligations.
Because of capital controls, the ruble had been rising until last week's slump, becoming the world's best-performing currency this year. The ruble was also boosted by new payment terms for gas supplies to EU consumers, which require the conversion of foreign currencies into rubles, and a drop in imports.
Russian stock indices fell.
The dollar-denominated RTS index fell 2.2% to 1,188.3 points. The Russian ruble-denominated MOEX index was down 0.8% to 2 381.0 points.
Shares in Sberbank, Russia's number one lender, slightly underperformed the broader market, falling 1.1% a day after the EU agreed on new sanctions. The bank said the exclusion from the SWIFT messaging system would not affect its business.