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Silence reigns in Russia over linking rouble fall to Ukrainian attack

Published 08/15/2024, 11:52 AM
Updated 08/15/2024, 12:06 PM
© Reuters. Russian rouble banknote is placed on Euro banknotes in this illustration taken April 7, 2022. REUTERS/Dado Ruvic/Illustration/ File Photo
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By Gleb Bryanski

MOSCOW (Reuters) - In Russia, there appears to be a new rule: Don't mention the war in relation to the rouble.

Russian media and analysts in state-controlled banks have stayed largely silent on a possible link between the 9% fall of the rouble against the U.S. dollar and Ukraine's surprise attack on the Kursk region.

The rouble's slide started on Aug. 6, the first day of the attack - the biggest by a foreign power on Russian sovereign territory since World War Two.

Currency traders who spoke to Reuters on condition of anonymity due to the sensitivity of the situation said that foreign banks were the main sellers of the Russian currency.

The rouble touched a 10-month low against the dollar and the lowest level against the yuan since June 24 in the Aug. 13 session. State banks mostly attributed the fall to economic factors.

Analysts at state-owned Sberbank, by far Russia's biggest bank, blamed U.S. sanctions against Moscow's Stock Exchange, imposed on June 12, and reduced currency sales by exporters.

"Exporters may have reduced the volumes of currency sales in recent days. This is due to the fact that the requirements for mandatory currency sales have become more lenient, and the tax and dividend periods have ended," Sberbank said in a note.

FINANCIAL SHIELD

The Russian central bank has remained silent on the rouble's fall. The Russian government did not respond to a request for comment.

Leading Russian business media reported on the rouble's fall - but did not link it to the Kursk attack.

Analysts quoted by the RBC business news portal attributed the fall to shrinking exports and reduced requirements for forex sales by exporters.

The news was also absent from main Russian state television news and talk shows, as well as from the websites of state media outlets.

The refrain from linking the rouble's fall to the events unfolding just 530 km (330 miles) southwest of Moscow illustrates a push within Russia to prevent bad economic news from reaching the wider public.

Russia has sought to present the $2.0 trillion economy as an increasingly invincible stronghold of self-sufficiency standing up to the massive pressure of the West's sanctions, the most punitive ever imposed on a major economy.

"Our finances are strong," Finance Minister Anton Siluanov said in a speech on Wednesday.

"It is important for us to build this financial shield so that all the financial pressures that anyone wants to exert on us are deflected... This is exactly what is happening now," Siluanov said.

One trader, who spoke on condition of anonymity, suggested that the intense rouble sales in recent days could also be linked to an upcoming stoppage of overseas money transfers by Austria's Raiffeisen Bank.

© Reuters. A vendor counts Russian rouble banknotes at a market in Saint Petersburg, Russia July 9, 2023.  REUTERS/Anton Vaganov/ File Photo

As the rouble started to rebound on Wednesday, some analysts tried to dismiss any linkage between the attack and the rouble's fall, while others predicted that it would soon stabilize.

Linking the currency decline to the Kursk incursion, said economist Mikhail Belyaev, represented an approach that "in my opinion... has no relation to reality".

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