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Russian Rouble Dips to 100 to Dollar as Trump Declares Election Win

The US Embassy with a US national flag, seen behind a building with a Russian national flag in Moscow, Russia, Tuesday, Nov. 5, 2024. (AP Photo/Alexander Zemlianichenko)
The US Embassy with a US national flag, seen behind a building with a Russian national flag in Moscow, Russia, Tuesday, Nov. 5, 2024. (AP Photo/Alexander Zemlianichenko)
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Russian Rouble Dips to 100 to Dollar as Trump Declares Election Win

The US Embassy with a US national flag, seen behind a building with a Russian national flag in Moscow, Russia, Tuesday, Nov. 5, 2024. (AP Photo/Alexander Zemlianichenko)
The US Embassy with a US national flag, seen behind a building with a Russian national flag in Moscow, Russia, Tuesday, Nov. 5, 2024. (AP Photo/Alexander Zemlianichenko)

The Russian rouble briefly weakened to 100 against the dollar on Wednesday as Donald Trump claimed victory in the US presidential election, a result that could push the U.S. currency higher.
Trump claimed victory in the 2024 presidential contest after Fox News projected that he had defeated Democrat Kamala Harris, which would cap a stunning political comeback four years after he left the White House.
By 0737 GMT, the rouble was 0.2% weaker against the dollar at 98.00, earlier touching 100.25, close to its weakest point in over a year, Reuters reported.
The rouble was steady against the yuan at 13.73, according to LSEG data, and gained 1.2% to 105.6 against the euro.
Analysts generally assume Trump's plans for restricted immigration, tax cuts and sweeping tariffs if enacted would put more upward pressure on inflation and bond yields, than Harris' center-left policies.
Trump's proposals would also tend to push up the dollar and potentially limit how far US interest rates might ultimately be lowered. Trump has also criticized the level of US military support for Ukraine and has pledged to end the conflict soon.
Western sanctions imposed on the Moscow Exchange (MOEX) and its clearing agent, the National Clearing Center, on June 12 stopped all trade in dollars and euros at MOEX, making the yuan the most-traded foreign currency in Russia.
Trade in dollars and euros has shifted to the over-the-counter (OTC) market, obscuring price data.
One-day rouble-dollar futures, which trade on the Moscow exchange are a guide for OTC market rates. The central bank's official exchange rate, which it calculates using OTC data, was last set at 98.06 to the dollar.

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How Will Anticipated US Interest Rate Cut Impact Gulf Economies?

Standard & Poor’s analysts said that lower interest rates should boost Gulf non-oil economies. (Photo: Reuters)
Standard & Poor’s analysts said that lower interest rates should boost Gulf non-oil economies. (Photo: Reuters)
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How Will Anticipated US Interest Rate Cut Impact Gulf Economies?

Standard & Poor’s analysts said that lower interest rates should boost Gulf non-oil economies. (Photo: Reuters)
Standard & Poor’s analysts said that lower interest rates should boost Gulf non-oil economies. (Photo: Reuters)

The US Federal Reserve is expected to reduce interest rates again at its upcoming meeting, a decision anticipated to affect Gulf economies and their banking sectors.

The Federal Open Market Committee plans to meet for two days starting Wednesday, and market forecasts suggest a rate cut of 25 basis points. This adjustment is likely to prompt similar reductions by Gulf central banks, whose currencies are pegged to the US dollar, with the exception of Kuwait, which follows a currency basket.

Sovereign analyst at Standard & Poor’s Zahabiya Gupta said that lower interest rates should boost Gulf non-oil economies by supporting demand for credit and sectors like real estate and construction.

“We expect average growth of 3.3% in the Gulf from 2024 to 2027, compared to 1% in 2023, supported by strong non-oil activity and increased oil production,” she remarked.

Gupta added that monetary easing should also help reduce debt service costs for governments, especially those with high borrowing needs, like Saudi Arabia in absolute terms and Bahrain as a percentage of GDP. Inflation rates are expected to remain relatively low, given managed prices on many goods and the relatively strong dollar peg.

For his part, Credit analyst Dr. Mohamed Damak from Standard & Poor’s told Asharq Al-Awsat that Gulf banks’ profitability is expected to remain strong in 2024, buoyed by a delay in rate cuts, resilient asset quality, supportive economies, limited leverage, and high precautionary reserves.

“We expect a slight deterioration in profitability in 2025 as the Fed continues cutting rates, with a total anticipated decrease of 225 basis points, including the 50 basis point cut made in September 2024, which Gulf central banks are likely to follow,” he stated.

Yet, lower rates may also lessen unrealized losses Gulf banks have accumulated over the past two years, which are estimated at about $2.8 billion, or approximately 1.9% of shareholder equity, he underlined.

The negative impact of rate cuts may be partially offset by several factors, Damak explained, saying that Gulf banks can mitigate these effects through strategic balance sheet adjustments, such as locking in current rates or switching from variable to fixed rates. Another factor includes the potential shift of deposits back to non-interest-bearing instruments, reversing the trend of recent years when deposits moved to interest-bearing accounts due to rising rates.

Lower rates could also reduce banks’ risk costs, as companies may find it easier to meet their debt obligations, improving creditworthiness and lowering the need for banks to set aside provisions. Additionally, accelerated loan growth could help counterbalance lower margins, especially in high-demand markets like Saudi Arabia, driven by large-scale Vision 2030 projects.

Damak noted that the impact of lower rates on liquidity levels would likely be neutral overall, with an expected reduction in unrealized losses within Gulf banks’ investment portfolios, albeit by a modest amount ($2.8 billion by the end of 2023). Lower rates might also encourage Gulf banks to tap international capital markets more actively, especially in countries needing extra liquidity to stimulate loan growth, such as Saudi Arabia.