The Russian ruble has fallen to fresh lows at the end of the trading week as markets around the world remain on edge over a surge in coronavirus cases across Europe.
The ruble shed 1.8% against the U.S. dollar — a significant movement in the foreign currency markets — to print 78.4 on Friday afternoon in Moscow. That was the ruble’s lowest reading against the greenback in more than five months.
The ruble also fell steeply against the euro, down 1.2% at 91.6 to its weakest level since February 2016.
The currency has been under pressure over the last few months as coronavirus cases have ticked up, neighboring Belarus was rocked by protests and the poisoning of Alexei Navalny raised the prospect of new sanctions against Russia. Since the beginning of June the ruble has lost 14% against the dollar, after initially recovering most of the steep losses seen in March and April when global oil prices collapsed.
The poor performance was also the result of a strong dollar, which investors have poured into as a possible safe haven, fearful of another round of economic turbulence as countries across Europe impose new quarantine measures to fight off a second wave of the coronavirus.
Moscow on Friday told elderly residents and those with health conditions to stay home, while asking the capital’s employers to return their staff to work-from-home routines.
The Russian stock market was also down 2% in dollar terms Friday.
Russian Ruble Is World’s Most Undervalued Currency on Big Mac Index
The Russian ruble is the world’s most undervalued currency, according to the Big Mac Index, compiled by British newspaper The Economist.
Based on market exchange rates, the Russian currency should be worth three times more against the U.S. dollar — 24 rubles per $1, rather than the 73.8 the currency was trading at Wednesday.
The Big Mac Index compares the price of the famous McDonald’s burger across the world. After accounting for differences in living standards — measured by GDP per capita — the ruble comes out as the most undervalued of the 55 currencies tracked by The Economist.
“A Big Mac costs 68% less in Russia ($1.81) than in the United States ($5.66) at market exchange rates,” The Economist said in its latest update to the index, published Tuesday.
“Based on differences in GDP per person, a Big Mac should cost 39% less. This suggests the ruble is 47.3% undervalued.”
The ruble has come out as “undervalued” against the dollar on the Index for the last nine years. The currency slid another 20% in 2020 on a combination of the coronavirus pandemic, a slump in global oil prices, geopolitical risks related to the U.S. election and the fallout from the Novichok poisoning of leading Kremlin critic Alexei Navalny last August.
The slump in the ruble’s exchange rate over the last 12 months also means Russia now boasts the cheapest Big Macs in the world, according to the Index. The flagship burger costs 135 rubles ($1.83) — the only one of the 55 countries tracked where a Big Mac costs under $2.