The Russian rouble dropped past the symbolic level of 100 to the dollar in early trade before rebounding marginally, constrained by outflows of foreign cash, the Kremlin emphasized on Tuesday.

Following the rouble’s most recent dip into the triple digits in August, the Bank of Russia raised interest rates to support the currency by 350 basis points to 12%.

The rouble touched a more than seven-week low of 100.2550 versus the dollar in early trading and was 0.6% better against the greenback at 99.17 by 11:50 GMT. It increased by 1% to 104.91 against the euro and by 0.5% to 13.53 against the yuan.

Dmitry Peskov, a spokesperson for the Kremlin, assured reporters that there was still no need for alarm. There is no need for alarm because the government’s and macro regulator’s measures assure macroeconomic stability.

The primary export from Russia, Brent crude oil, was down 0.8% at $90.01 per barrel, its lowest level in over a month, but it was still far above its 2023 average.

The Russian ruble frequently experiences downward pressure at the beginning of each month due to losing the support of a favorable month-end tax period, during which exporters typically convert FX profits to pay domestic obligations.

Promsvyazbank analysts stated that the prognosis for the rouble was improving, but only in the long term due to high oil prices and a rise in the key rate. They anticipated that in the absence of further support measures from the authorities, the rouble would briefly climb above 100 to the dollar.

Psychology Barrier

When the rouble dropped to 101.75 per dollar in August, President Vladimir Putin’s economic advisor criticized the central bank, criticizing its lax approach as a symptom of escalating domestic strife.

“This level (100) is not a technical resistance, it’s an important psychological barrier,” stated Alexei Antonov of Alor Broker. “For the time being, everything points to the rouble getting cheaper.”

Following the emergency rate increase in August, the central bank increased rates again in September to 13%. At its upcoming meeting on October 27, according to analysts surveyed by Reuters, the central bank, which is also dealing with persistent inflationary pressure, is expected to tighten monetary policy once again.

Since Russia invaded Ukraine in February 2022, the rouble has followed a rocky path, falling to a historic low of 120 versus the dollar in March last year before rising to a more than seven-year high a few months later, buoyed by capital controls and soaring export revenues.

The rouble has declined due to declining exports, which Western sanctions and changing trade patterns have impacted, as well as increased imports this year. Between January and August, Russia’s current account surplus decreased by 86% yearly to $25.6 billion.