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Rouble runs out of luck

Russia’s rouble has managed to shake off the slide in oil for months. No longer.

The dollar is trading close to Rbs60 against the rouble today. That’s in fact a small improvement for the rouble from yesterday, but it still leaves it around its weakest point since February, and makes it the worst-performing emerging-market currency of the month so far.

The rouble is not alone. As Kit Juckes at Société Générale notes:

The victims in FX-land of the falling oil price have been the rouble, down 4% since the end of last week against the dollar and even managing to fall further than the Icelandic krona; the Colombian peso and Mexican peso are both suffering from weaker oil, though not quite as much. In G10, the Norwegian krone and Canadian dollar have been more resilient, though both have lost 0.8% and while we think that resilience reflects a stronger long-term story, they will track further falls in oil prices if that’s what comes their way.

Rabobank’s Piotr Matys said the impact could spread to other regional currencies, with uneven effects:

Given that inflationary pressures from the cost-push factors are unlikely to increase significantly and sluggish wage growth implies that demand-led pressures should stay subdued, the process of monetary policy normalisation by major central banks will remain relatively slow. This bodes well for the emerging markets, although it is important to differentiate as commodity importers should outperform exporters. The Polish zloty and the Turkish lira are coping much better with global risk aversion with losses led by the Russian ruble and the South African rand, which are more sensitive to commodities.