Russian ruble extends decline after interest rate cut; Eurobonds dominate attention

The Russian ruble continued its recent losses on Friday (27), after a sharp drop in the previous session, with interest rate cuts, the signal of further reductions, the prospect of easing capital controls and a possible default. sovereign by striking the coin.

The ruble tumbled about 10% against the dollar and euro on Thursday after the central bank lowered its key rate to 11%, the third straight cut of 300 basis points, as inflation decelerates from highs of more than 20 years.

As the ruble continued to fluctuate this way on Friday, Prime Minister Mikhail Mishustin said the government wants to avoid currency volatility, a sign that Moscow is not entirely comfortable with the ruble’s seemingly uncontrollable movements.

At around 11:19 am (GMT), the ruble was down about 2.3% at 66.8025 to the dollar, fluctuating during the session from 64.89 to the dollar to a more than two-week low of 67.4950 to the dollar. .

On Wednesday, the ruble hit its strongest level since February 2018 at 55.80 to $1.

Against the euro, the ruble also lost around 2.3%, to 69.58 per euro, moving further from the seven-year high of 57.10 per euro reached on Wednesday (25).

The market’s eyes are focused on NSD, Russia’s central settlement of financial operations, which promised to make interest payments this Friday in the amount of US$ 71.25 million and 26.5 million euros related to two Eurobonds.

This is despite Washington deciding not to extend a key license that allowed Moscow to continue paying bondholders despite sanctions imposed over the country’s actions in Ukraine, putting Russia on the brink of a unique type of debt crisis.

Russian stock indices showed weakness.

The dollar-denominated RTS index dropped 2.95%, while the ruble-denominated MOEX index hovered around stability, with a slight increase of 0.21%.