Russian rouble weakens to US dollar after hitting highest since June 2023

MOSCOW, May 14 (Reuters) - The Russian rouble weakened against the U.S. dollar on Wednesday after reaching its strongest level since early June 2023 in the previous session.

By 0910 GMT, the rouble RUB= was down about 0.7% at 80.40 to the U.S. dollar, LSEG data based on over-the-counter quotes showed. The Russian currency has risen by more than 40% against the dollar so far this year.

The rouble broke through the level of 80 to the dollar on May 13, reaching 79.37, its strongest level since June 6, 2023.

The rouble has surprised analysts in recent weeks, maintaining strength despite low prices for oil, Russia's main export. Analysts suggest that hopes for a peaceful settlement in Ukraine, as well as slow imports, are contributing to the rouble's strength.

Imports have slowed this year due to high interest rates, which make loans to pay for foreign goods out of reach for companies and households. However, analysts expect imports to resume growth later this year.

"The excessive strength of the rouble right now may be related to both the positive situation with currency liquidity and geopolitics," Raiffeisen Bank analysts said. They estimate the fair exchange rate for the rouble to be 94-95 to the U.S. dollar.

High-level delegations from the United States, Russia, and Ukraine are expected to meet in Istanbul on May 15.

The decrease in foreign currency sales by the central bank from May 13, which was anticipated to reduce support for the rouble, did not significantly impact the exchange rate.

Most analysts expect the Russian currency to begin weakening, with some fearing that the market could overreact to a random trigger for sales.

"Currently, the rouble is overvalued. Determining the extent is a complex question," said Dmitry Belousov, head of TsMAKP think tank, which advises the government. He emphasized that current trade wars could affect Russian commodity exports.

"If issues arise with the trade balance, the exchange rate may move in the opposite direction — and there are risks that it might overshoot due to purely psychological reasons," Belousov said.

Against the Chinese yuan, which is used by Russia's central bank for its foreign exchange interventions and is the most-traded foreign currency in Russia, the rouble was down 0.2% at 11.13 to the yuan on the Moscow Stock Exchange.