INSUBCONTINENT EXCLUSIVE:
Rouble collapses back to $117, as Russia's isolation intensifies.The Russian rouble collapsed back to $117, bringing back memories of a
similar scale of slumps in the currency when Russia defaulted on its debt in 1998.While Russia's central bank more than doubled its
interest rates announced several capital key controls, the currency has been whiplashed since the country attacked Ukraine last week.The
crippling Western sanctions, which included freezing Russia's foreign currency reserves and locking out Russian banks from international
transactions, are starting to bite.Moody's and Fitch downgraded Russia's sovereign rating to a 'junk' grade on Thursday following those
severe sanctions.Ordinary Russian citizens face the prospect of higher inflation in a country that has seen more than one currency disaster
in the post-Soviet era.Russians wary that sanctions would deal a crippling blow to the economy have been flocking to banks and ATMs for
it has see-sawed on the news flow, at one point, the currency sank nearly 30 per cent to record lows and is well below the $75 it traded
before Russia sent troops into its neighbouring country last week.What is particularly interesting is the rouble's gains during Moscow
trading hours and its weakness after the Moscow close over the last few days."The counter-party limitations and risks posed by aggressive
sanctions against Russian institutions have seen the emergence of a two-tier rouble market
Onshore names will trade with onshore names and offshore with offshore
The introduction of sanctions against many Russian banks has seen bifurcation emerge in the rouble FX spot market, where the rouble
onshore USD/RUB rate closed around 101 when the offshore rate was being quoted at 115
It is hard to see that gap being closed anytime soon
However, there is a chance that the offshore USD/RUB is dragged a little lower as Russian exporters are forced to sell their accumulated FX
earnings over coming days - these flows may go through the onshore market as we understand it," he added.
