Analysis of the ruble’s December move and the market factors involved
The depreciation of the ruble in December last year emerged from a mix of influences. Non resident asset purchases, heightened seasonal demand for foreign currency, and a dip in oil prices all played roles, according to a review of the Regulator on financial market risks through December 2023. The report highlights that the short term weakening was also accelerated by the expiration of futures contracts, a technical factor that can amplify price moves as settlements occur and market liquidity adjusts.
Earlier evidence showed Russians swapped record sums for foreign currency during December, with purchases totaling 179 billion rubles. A vast majority of these transactions were in dollars and euros, intensifying demand in the foreign exchange swap market and contributing to tighter liquidity conditions in that sector. This dynamic underscored the sensitivity of the ruble to shifts in demand for hard currencies and to changes in the global currency framework.
Despite these pressures, the ruble ended the month with a relatively modest decline, losing about 1 percent against the dollar. Exporters actively converted their foreign currency earnings into rubles, and their net sales rose by around 14 percent relative to November, reaching 588.2 billion rubles. This activity demonstrated a counterbalance to some of the inflow concerns and reflected a currency market still functioning with a degree of resilience amid shifting external conditions.
In recent public remarks at the Financiers Day forum in Moscow, Elvira Nabiullina, president of the Central Bank of the Russian Federation, faced questions about the underlying reasons for the December movement. The Central Bank declined to comment, while the presidential press secretary indicated that the matter involved personal information and would not be disclosed. Such exchanges highlight the regulator’s careful approach to public messaging during episodes of currency volatility.
Separately, the Central Bank previously warned about a new method of phone-based fraud. This advisory underscores the broader risk environment that can accompany currency market episodes, reminding participants to exercise vigilance against evolving scams that may exploit times of heightened uncertainty.