Russian Ruble To Start Falling After Inconclusive Talks In Istanbul

Investors are buying up the currency.

The ruble fell markedly in value on the Moscow Exchange and forex after the end of Russian-Ukrainian talks in Istanbul, which again failed to bring a truce closer on the front, The Moscow Times wrote.

The yuan's exchange rate jumped nearly 2% in the first three hours of trading Thursday, to RUB 11.1485, the highest since late May, before falling back to RUB 11.04 at 16.39 Minsk time.

The dollar exchange rate on the OTC market rose above RUB 79 for the first time in three weeks to reach RUB 79.55 (+1.5%). The euro rose to 93.5 rubles, the highest value in the last 11 weeks.

"Exchange players are disappointed with the formal nature of the round of Russian-Ukrainian negotiations in Istanbul," states Natalya Milchakova, a leading analyst at Freedom Finance Global. The third meeting of the Moscow and Kiev delegations was shorter than all the previous ones: it lasted only 40 minutes, and at its conclusion the sides agreed only to continue exchanging prisoners and bodies of the dead, as well as to form working groups in an online format. Ukraine has been pushing for a summit between Putin and Vladimir Zelensky, but the Kremlin, on behalf of Dmitry Peskov, said that was still a long way off.

"Talk about a summit can only take place after substantive work has been done," he said on Thursday.

"The stock market is also down," Milchakova said: the MosBirch index, which includes securities of four dozen major Russian companies, is down 1%, losing 60 billion rubles in terms of capitalization. "Gazprom" fell in price by 1.2%, Sber - by 0.94%.

The shares, explains Milchakova, are under pressure from weak results of the largest Russian companies, suffering from high interest rates and economic slowdown. And on the ruble - the reduction of export revenues. points out investment banker Evgeny Kogan.

In May, he recalls, prices for Russian exports were minimal: Urals oil was sold cheaper than $50 per barrel. "Revenue comes with a delay, which will manifest itself now," explains Kogan.

Investors are selling rubles and buying up currency in the expectation that the Central Bank of Russia will go for a sharp reduction in the key rate - from 20% to 18% already this Friday, write analysts PSB. According to their forecast, by the end of the year, the ruble may weaken by almost 10%, to 12 rubles per yuan.

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