Investing.com - The Russian rouble continued to weaken against the U.S. dollar on Monday, falling to new all-time lows as concerns over the latest round of Western sanctions pressured the currency lower.
USD/RUB was last up 1.05% for the day to 38.19. This takes the dollar’s year-to-date gains against the rouble to 16.1%.
The new sanctions imposed by the U.S. and the European Union on Friday targeted major Russian oil and energy companies and banks. The measures are in response to what the U.S. and the E.U. say is Moscow's role in the separatist conflict in Ukraine.
The Bank of Russia left interest rates on hold at its latest meeting on Friday, adding to pressure on the rouble. Several rounds of sanctions already imposed have weakened the currency and caused a spike in inflation.
The central bank warned that sanctions will have "a prolonged impact" on the economy but said that it will target no economic indicators other than inflation, indicating that rates are unlikely to rise despite concerns over the economic impact of the Ukraine crisis.
Weaker oil prices also weighed on the rouble. Brent oil futures fell to two-year lows on Monday as weak Chinese economic data fuelled concerns over a slowdown in the global demand outlook.
Oil and gas exports make up approximately two-thirds of all Russia’s total exports.
Emerging market currencies remained under pressure as growing expectations for an early hike in U.S. interest rates continued to bolster investor demand for the greenback.
The Fed was expected to cut its asset purchase program by another $10 billion at its upcoming policy meeting on Wednesday, which would keep it on track for winding up the program in October, and to start raising interest rates sometime in mid-2015.
Emerging market economies are particularly vulnerable to increases in U.S. interest rates, due to their dependence on foreign investment to fund current-account deficits.
Elsewhere, the rouble fell to new record lows against the euro, with RUB/EUR slumping 0.98% to 0.0202.