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Russian Rouble falls on eased capital control

Russian Rouble falls on eased capital control

Russia’s currency weakened at the beginning of the week following the central bank’s decision to temporarily relax the capital control measures meant to limit a drop in the currency

On the opening in Moscow, the Rouble fell to 82.09 against the US Dollar, from the 71 Rubles hit on Friday – the strongest since Nov 11.

The reading comes after, on Friday, the central bank announced that it would scrap a 12% commission for buying foreign currency through brokerages from April 11 and lift a temporary ban on selling foreign exchange cash to individuals from April 18. Also, the finance ministry said that it wouldn’t borrow from local or foreign debt markets this year.

On Monday, Finance Minister Anton Siluanov stated that Russia would take legal action if the West tried to force the country to default on its sovereign debt. "Of course, we will sue because we have taken all the necessary steps to ensure investors receive their payments,” Siluanov said. "We will present in court our bills confirming our efforts to pay both in foreign currency and in rubles. It will not be an easy process. We will have to very actively prove our case, despite all the difficulties," he added.

Russia faces the first sovereign external default in more than 100 years after arrangements to make an international bond payment in Rubles earlier last week, even though the payment was due in US Dollars. Russia has not defaulted on its external debt since its 1917 revolution. Still, given the ongoing geopolitical situation, its bonds have emerged as a flashpoint in its economic struggle with Western countries.

At the moment of writing, the Russian Rouble was trading at 80.94 against the US Dollar and at 88.47 against the Euro.

Sources: finance.yahoo.com, reuters.com

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