# Rouble weakens sharply from over 2-year high vs euro before long weekend
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-05-06
Category: TRADING
Category URL: https://financedigest.com/category/trading
Meta Title: Russian rouble weakens as spectre of new sanctions looms
Meta Description: Stay updated on the latest news as the Russian rouble weakens against the euro amid fears of more sanctions impacting the market. Read more here.
URL: https://financedigest.com/rouble-weakens-sharply-from-over-2-year-high-vs-euro-before-long-weekendhtml

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(Reuters) -The Russian rouble dropped sharply on Friday, pulling back from a more than two-year high against the euro as the spectre of more sanctions against Moscow hung over markets ahead of a second consecutive long holiday weekend.

The European Union’s executive on Wednesday proposed the toughest package of sanctions yet against Russia for its actions in Ukraine, but several countries’ worries about the impact of cutting off Russian oil imports stood in the way of agreement.

By 1201 GMT, the rouble had lost 4.7% to trade at 73.45 versus the euro, falling sharply from its strongest point since February 2020 of 69.1250.

The [rouble was 3.8% weaker against the dollar](https://www.financedigest.com/rouble-falls-past-61-vs-dollar-as-conversion-of-depository-receipts-begins.html "Rouble falls past 61 vs dollar as conversion of depository receipts begins") at 69.52 , not too far from a more than two-year high of 65.3125 hit on Thursday.

The rouble has rallied in the [past few weeks](https://www.financedigest.com/soccer-premier-league-has-record-42-positive-covid-19-cases-in-past-week.html "Soccer: Premier League has record 42 positive COVID-19 cases in past week") thanks to mandatory conversion of foreign currency by export-focused companies. Also, there has been weak demand for [dollars and euros](https://www.financedigest.com/pound-hits-10-month-peak-euro-up-as-dollar-under-pressure.html "Pound hits 10-month peak, euro up as dollar under pressure") amid waning imports and restrictions on cross-border transactions.

“It looks like the rouble has found a new equilibrium point around 67, at least for the time being,” said Sberbank CIB analysts in a note. However, we think the local [currency may begin to strengthen again when we come out of the May holidays](https://www.financedigest.com/euro-having-a-laugh-a-quarter-of-brits-take-the-wrong-currency-on-holiday.html "Euro having a laugh: a quarter of Brits take the wrong currency on holiday") next week, with exporters gradually beginning to step up their offers of hard currency.

They said the rouble could strengthen to 60 against the greenback by the [end of the month](https://www.financedigest.com/covid-hit-shanghai-to-end-two-month-lockdown-on-june-1.html "COVID-hit Shanghai to end two-month lockdown on June 1").

SberCIB [Investment Research’s Yuri Popov expects](https://www.financedigest.com/uks-dominos-expects-tech-investments-to-hit-2023-profit.html "UK’s Domino’s expects tech investments to hit 2023 profit") the rouble to trade at 75 to the dollar at year-end, improving his forecast from April of 85.

Moves in the rouble are sharper than usual as [market liquidity has been thinned by central bank](https://www.financedigest.com/market-stress-indicators-react-sharply-after-u-s-bank-failures.html "Market stress indicators react sharply after U.S. bank failures") restrictions designed to prop up financial stability after Russia sent tens of thousands of troops into Ukraine on Feb. 24.

Meanwhile, [trading activity is subdued as the markets](https://www.financedigest.com/the-benefits-of-social-trading-in-a-volatile-market.html "The benefits of social trading in a volatile market") are open for only three days this week in the middle of Russia’s long May holidays.

Brent [crude oil](https://www.financedigest.com/russian-urals-crude-oil-prices-jump-ahead-of-eu-embargo.html "Russian Urals crude oil prices jump ahead of EU embargo"), a global benchmark for Russia’s main export, was up 1.7% at $112.8 a barrel.

[Russian stock](https://www.financedigest.com/russian-rouble-firms-towards-60-vs-dollar-stocks-up.html "Russian rouble firms towards 60 vs dollar, stocks up") indexes were down.

The dollar-denominated RTS index was 3.7% lower at 1,078.1 points. The rouble-based MOEX Russian index was down 1% at 2,381.6 points.

Promsvyazbank analysts said they expected equity markets to [drop ahead of another long holiday](https://www.financedigest.com/happy-parents-head-to-the-sunshine-as-uk-councils-drop-term-time-holiday-cases.html "HAPPY PARENTS HEAD TO THE SUNSHINE AS UK COUNCILS DROP TERM-TIME HOLIDAY CASES") weekend.

(Reporting by ReutersEditing by Frank Jack Daniel, Mark Potter and Chizu Nomiyama)


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