Coronavirus Crisis Negatively Affects Russian Ruble

The ruble-to-dollar exchange rate in Russia has exceeded 66 rubles per dollar for the first time since September 2019, and stock indexes have plunged to their lowest levels in months, which is partly due to the global coronavirus outbreak, Kommersant writes.

The rapid spread of the novel coronavirus outside of China is making investors withdraw from risky assets, and ruble assets have turned out to be the weakest ones due to a decline in oil prices, the business newspaper notes.

International investors are overwhelmed with panic because the epidemic, which they thought was a local one, is now rapidly spreading across the world. 

“Pessimistic sentiment mounted in the middle of the week when the U.S. Center for Disease Control and Prevention stated that Americans needed to get ready for a possible coronavirus outbreak, which might have a huge negative impact on everyday life in America,” Sberbank Commodity Market Strategist Mikhail Sheibe noted.

The coronavirus scare will continue to influence markets, including the oil market, as economic and transport activities decline, said Head of Equities at Otkritie Asset Management Vitaliy Isakov. Markets fell due to concerns that COVID-19 would reduce fuel demand not only in China but in Europe and the US as well.

“Coronavirus fears and an oil price drop, the biggest since May 2019, are the reasons behind the ruble’s decline,” Finam analyst Sergei Drozdov told Nezavisimaya Gazeta.

If a nightmare scenario, namely a global pandemic, comes true, the ruble exchange rate may fall to 70 rubles per dollar in the spring or summer, Chief Analyst at BCS Premier Anton Pokatovich said. However, in his words, if the worst expectations are shattered and the situation turns out to be moderately negative, the rate will reach 67-68 rubles per dollar in the near future.

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