Ruble plunges for 2nd day following US sanctions

MOSCOW — The ruble plunged for the second day in a row Tuesday following fresh U.S. sanctions against Russia.

The Russian currency traded above 63 to the dollar for the first time since Dec. 2016, down by more than 4.5 per cent. The euro was worth more than 78 rubles for the first time since early 2016, when historically low oil prices were hurting the Russian economy.

The sanctions introduced Friday against numerous Russian businessmen, officials and companies have caused sharp share price drops for sanctioned companies — most notably aluminum producer Rusal — but also the wider stock market, particularly banks which may be exposed to the sanctioned firms.

Russian Deputy Prime Minister Arkady Dvorkovich said planned government support for sanction-hit companies will focus on stabilizing them to avoid job losses, rather than propping up share prices.

“The main thing right now is to minimize uncertainty while securing stable functioning of the companies, where hundreds of thousands of people work,” he told an economic forum in Moscow. “If necessary we will ensure the preservation of stable functioning … Share prices are a secondary thing in this case.”

He didn’t provide details of how the measures could work.

On the Moscow exchange, the main MOEX index was up almost 1.4 per cent in morning trading after taking a heavy hit Monday.

Rusal shares have dropped sharply since the sanctions were announced, falling by 50 per cent in Hong Kong trading Monday, and the company has warned it may technically default.

On Tuesday, the chief executive of commodities giant Glencore, Ivan Glasenberg, left the board of Rusal, Glencore said.

Glencore also said it “will not proceed … at this time” with a planned deal to swap its 8.75 per cent stake in Rusal for a stake in billionaire Oleg Deripaska’s holding company EN+ Group.

Glencore, which purchases large quantities of aluminum from Rusal, added it is “still evaluating the position under its contracts with Rusal, but notes that these contracts are not financially material to Glencore.”

The sanctions freeze any assets that those targeted have in U.S. jurisdictions and bar Americans from doing business with them.