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Russian ruble slumps to 18-month low as Israel-Hamas war sends US dollar higher in flight to safety

Jennifer Sor   

Russian ruble slumps to 18-month low as Israel-Hamas war sends US dollar higher in flight to safety
  • Russia's ruble hit a fresh 18-month low against the dollar on Monday.
  • The move comes as investors seek the safety of the US dollar amid fresh conflict in the Middle East.

Russia's currency hit its lowest level against the dollar in more than 18 months, as a new conflict in the Middle East sends investors toward the greenback in search of safe haven.

Russia's ruble traded around 102 against the US dollar on Monday, days after Hamas staged an unprecedented attack on Israel over the weekend. That's the lowest the ruble has been valued against the dollar since April 2022, just a few months after it began its invasion of Ukraine.

Though conflict in the Middle Eastern has historically raised oil prices – a major source of income for Russia – Hamas' deadly attack on Israel has sparked concern among foreign currency investors, leading them to run towards the US dollar for safety.

That's boosted the value of the dollar, which continues to be one of the best-performing currencies so far this year. The US Dollar Index — which measures the greenback against a basket of other currencies — inched higher to around 106.25 on Monday.

Israel's shekel, meanwhile, slid to a seven-year-low against the dollar, prompting the Bank of Israel to announce it will sell up to $30 billion in foreign reserves to help stem the slide.

The ruble has been on the decline for most of 2023, with the currency down 38% from its levels against the dollar in January. That fall has largely been stoked by Moscow's economic weaknesses, with capital pouring out of the country and its energy revenues being stunted by Western sanctions on Russian oil and gas.

President Vladimir Putin, though, has balked at claims that Russia's economy is in bad shape. Previously, he said that there were no "absolutely insurmountable" problems that Russia was currently facing, and in a September meeting with budget makers, proclaimed that Russia's economic situation was "generally stable and balanced," Interfax news agency reported.

Western economists, though, have challenged those views. Russia's GDP could shrink by nearly a full percent this year as high inflation ravages its economy, according to the European credit rating agency Scope Ratings. Russia is also at risk of de-industrializing as it allocates more money to its costly war against Ukraine, Finland's central bank said.


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