Investing.com - The Russia rouble fell to record lows against the dollar on Tuesday as concerns over the impact of the latest round of economic sanctions continued to pressure the currency lower.
USD/RUB touched highs of 38.83 before pulling back slightly to trade at 38.53, 0.48% higher for the day. For the month to date, the dollar has gained approximately 6.7% against the rouble.
The rouble continued to weaken amid concerns over the fallout from new sanctions imposed by the U.S. and the European Union on Friday over Moscow's support for pro-Russian rebels in the separatist conflict in Ukraine.
The new sanctions targeted major Russian oil and energy companies and financial institutions. Several rounds of sanctions already imposed have weakened the currency and caused a spike in inflation.
The Bank of Russia left interest rates on hold at its latest meeting on Friday, adding to pressure on the rouble.
The central bank warned that sanctions will have "a prolonged impact" on the economy, but indicated that monetary policy is unlikely to tighten despite concerns over the economic impact of the Ukraine crisis.
Emerging market currencies remained under pressure as heightened expectations for an early hike in U.S. interest rates continued to underpin dollar demand ahead of Wednesday’s Federal Reserve policy meeting.
The Fed was expected to cut its asset purchase program by another $10 billion, which would keep it on track for winding up the program in October, and to start raising interest rates sometime in mid-2015.
Emerging market economies are particularly vulnerable to increases in U.S. interest rates, due to their dependence on foreign investment to fund current-account deficits.
Elsewhere, EUR/RUB hit highs of 50.28 before falling back to 49.92, still 0.63% higher for the day.