Home The Watchforex news Ruble Weakens on S&P Warning of Downgrading Russia

Ruble Weakens on S&P Warning of Downgrading Russia

by Yomna Yasser

The ruble weakened in early trade on Wednesday, giving up its slight gains seen at opening, after Standard and Poor’s rating agency warned it could downgrade Russia’s rating to speculative in January.

At 0725 GMT, the rouble was 0.7 percent weaker against the dollar at 54.88 after opening 0.7 percent up. It lost 0.8 percent versus the euro to 67.00.

Late on Tuesday, S&P revised Russia’s credit ratings to creditwatch negative from negative, warning the country’s monetary flexibility deterioration could lead to putting its sovereign rating into junk territory as soon as mid-January.

“We note that S&P’s rating for Russia is currently at the low boundary of the investment-grade category and would lose such a status if downgraded,” analysts at Sberbank Investment Research wrote in a morning note.

“Things would become more complicated if two of three ratings are moved to speculative.”

The central bank’s statement that it would start lending money in hard currencies to companies and banks willing to put their foreign loans as collateral did little to help the currency.

The ruble’s decline was softened by exporters selling their foreign currency earnings, responding to the government’s order from Tuesday to start selling hard currency and partly doing it on its own as they need rubles for the monthly tax payments due this week.

Source: Reuters

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