The Russian Ruble (RUB) fell to a new record low level against the Pound (GBP) and US Dollar (USD) on Monday as heavy fighting in Ukraine increased the likelihood of more sanctions being imposed upon the Russian economy.
Tensions escalated last week after Ukraine’s President accused Russian forces of being directly involved in the fighting in the east of the country.
Sources from NATO and other observers said that a column of Russian armoured vehicles crossed the border and has Russian troops have engaged in battling Ukrainian forces.
Shortly after the accusations pro-Russian rebels managed to launch a major counterattack against Ukrainian forces encircling the rebel strongholds of Donetsk and Luhansk. It had been hoped that the conflict would soon end. That has all changed now that Russia is involved.
On Monday, reports came in that Russian tanks attacked airfields in the east of the country. A major battle was being fought over Luhansk airfield before Ukrainian forces went on the retreat.
Because of the new offensive by the rebels, calls have increased in the USA and Europe for the West to arm Ukraine’s forces.
“We should be providing the Ukrainians with the type of defensive weapons that will impose a cost upon Putin for further aggression,” said US senator Robert Menendez.
In another escalation, the rebels attacked two Ukrainian coastguard vessels after advancing towards the coastal towns of Mariupol and Novoazovsk. Ukrianian forces are also reportedly engaged in battle with a Russian tank column near to Luhansk.
European leaders called for new harsher sanctions to be imposed against Russia if the conflict continues to worsen.
‘Fears of new sanctions from the European Union are shaking the Ruble market. Rebels are succeeding in their advance in eastern Ukraine so in the EU’s perspective, an escalation is happening,’ said Vladimir Miklashevsky a strategist from Danske Bank.
Economists will be watching to see how the Russian Central Bank will react to the worsening situation. Since March, the Bank has raised interest rates three times in order to protect the Ruble and keep inflation under control.
A further rate rise will no doubt be deeply unpopular amongst the Russian populace as borrowing costs are already high and sanctions have seen a drop in European goods on Russian shelves.
Pound Sterling to Russian Ruble Exchange Rate Forecast
Sterling is likely to continue to find support against the Ruble for the rest of the week as speculation over new sanctions and heavy fighting looks set to continue. Further territorial gains for pro-Russian separatists will also weigh on the Ruble.
The Pound to Russian Ruble Exchange Rate is trading in the region of 61.8800
Comments are closed.