Ruble Falls Amid Political Turmoil
The Russian ruble slumped in forex trading on Friday, falling to a three-month low against the dollar. This was amid renewed political turmoil in the region, fueling fears of additional sanctions.
At 9:10 AM ET (1310 GMT), USD/RUB was up 1.4% at 74.8355. It was trading at levels last present in early May and up over 20% year to date.
Russian opposition leader, Alexey Navalny, was hospitalized on Thursday, following fears of a suspected poisoning.
The 44-year-old lawyer has never challenged President Vladimir Putin at the ballot box. However, he is the highest-profile leader of Russia’s deeply divided government opponents.
His wife, Yulia Navalnaya, has allegedly written a letter to Russian President Vladimir Putin. This was in request of the permission for Navalny to seek medical assistance in Germany.
This is increasing people’s attention on the region at a time of the prospect of Russian intervention in Belarus. They could possibly support the beleaguered President Alexander Lukashenko following disputed presidential elections.
Analysts at MUFG Bank said the fear of Russian military intervention poses downside risks for the ruble. This is similar to the situation in Ukraine and the imposition of further sanctions on Russia.
Dollar Falls Amid Recovery Concerns
Meanwhile, the dollar weakened in early European forex trade on Friday. This was amid doubts about the pace with which the U.S. economy will rebound from the coronavirus-inspired slowdown.
At 2:55 AM ET (0655 GMT), the Dollar Index was down 0.1% at 92.662. USD/JPY fell 0.2% at 105.57, while EUR/USD rose 0.1% at 1.1868.
The greenback was being dragged lower by the news on Thursday that applications for U.S. unemployment benefits increased. This was defying consensus forecasts for a further decline. The Philadelphia Fed reported a disappointing reading for its manufacturing index.
This came a day after the Federal Reserve gave a warning. This warning cautioned that the path to U.S. economic recovery from the Covid-19 outbreak remained highly uncertain. The recovery in hiring is starting to slow.
The euro has been the biggest beneficiary of a recent decline in the dollar. But the release of eurozone manufacturing data later in the session could test this tone.
Elsewhere in FX news, GBP/USD traded 0.2% higher at 1.3240. This then helped retail sales rise above their pre-coronavirus level in July. Shops selling non-essential goods opened again after the lockdown in March.
