Euro plunders against Ruble, reaches lowest since 2014
The rate of the euro is sharply falling in the domestic exchange market in Russia as the European currency is being dumped and demand for it is massively declining.
Hitting its lowest rate against the Russian ٌuble since October 2014, the Euro crumbled in the MOEX (the Moscow Exchange) on Friday to reach a value of 52.5 Rubles/Euro after falling 5.1% (2.97 Rubles) from its last closing session, while current trades are recording continuous losses to the Euro against the Ruble at the MOEX.
On the other hand, the Chinese Yuan recorded slight losses against the ruble, falling by 0.2%, while the US dollar fell by 0.5%, to reach values of 8.104 Rubles/Yuan and 56.92 Rubles/USD respectively.
Watch here: The euro hits a 20-year low
The euro's rate decline in the Russian exchange market is not proportionate to its trading dynamics in the FX markets, experts stated, arguing that while it's crashing against the Ruble in the Moscow local exchange, it is recording a slight increase against the USD (0.983 Euro/USD at the time of the report), meaning that the Euro is hitting a rate 6.2% lower against the Dollar in the Moscow exchange than it is in the global FX market.
According to analysts, this is caused by the absence of demand for the Euro in the MICEX (Moscow Interbank Currency Exchange) and a large plummet of its currency in the domestic foreign exchange market.
Last May, against all Western claims that sanctions will be the end of Russia's economy, the exchange rate of the dollar and the euro fell against the Ruble, and the currency was trading below 69 rubles for the first time since June 2020, while the euro was trading below 73 rubles.
In response to Western sanctions, Russian President Vladimir Putin announced that his country would only accept payments in Rubles for gas deliveries to "unfriendly countries" in a nod to all EU members involved in the harsh sanctions imposed on Moscow.
The appreciation of the Ruble against the USD and the Euro is mainly due to Putin's decision, as following his announcement, Russia's Ruble rose in the face of the USD and the Euro, marking a major hike since the currency took a dive against the western currencies due to the sanctions imposed on the country.
The Euro also dropped below the symbolic $1.00 mark last July for the first time since December 2002, as a result of a deteriorating prognosis for the economy of the eurozone and the potential for a total interruption of the Russian gas supply.
Eurozone economic growth has been on a decline and could soon become zero, according to the vice president of the European Central Bank (ECB) on September 27.
“We are seeing that in the third and fourth quarters there is a significant slowdown and we may find ourselves with growth rates close to zero,” said Luis de Guindos at a conference, as reported by Reuters.
Due to the stark increase in energy costs and the loss of Russian gas, economic output has been suffering. This has raised the risk of energy rationing in the next season, which will require a lot of heaters.
Last August, EU energy minister gave the European Commission a mandate to limit gas prices. Surging costs of power linked to gas prices have already stunted the production of various industries, such as fertilizers and aluminum manufacturers, and prompted EU governments, such as Germany, to increase their spending by billions in order to help their citizens.