Silence reigns in Russia on the correlation of the fall of the ruble with the Ukrainian attack By Reuters

By Gleb Bryanski

MOSCOW (Reuters) – In Russia, there seems to be a new rule: Don’t mention the war in relation to the ruble.

Russian media and analysts at state-controlled banks have remained largely silent on a possible link between the ruble’s 9% drop against the US dollar and Ukraine’s surprise attack on the Kursk region.

The ruble’s slide began on August 6, the first day of the attack – the biggest by a foreign power on Russian sovereign territory since World War II.

Currency traders who spoke to Reuters on condition of anonymity because of the sensitivity of the situation said foreign banks were the main sellers of the Russian currency.

The ruble hit a 10-month low against the dollar and its lowest level against the yuan since June 24 in the August 13 session. State-owned banks largely attributed the decline to economic factors.

Analysts at state-owned Sberbank, by far Russia’s biggest bank, blamed US sanctions on the Moscow Stock Exchange, imposed on June 12, for reducing currency sales by exporters.

“Exporters may have reduced the volumes of foreign exchange sales in recent days. This is due to the fact that the requirements for mandatory foreign currency sales have become softer and the tax and dividend periods have ended,” Sberbank said in a note.

FINANCIAL SHIELD

The Russian central bank has remained silent on the fall of the ruble. The Russian government did not respond to a request for comment.

Russia’s main business media reported the fall of the ruble – but did not link it to the Kursk attack.

Analysts cited by the RBC business news portal attributed the decline in exports to a reduction in requirements for foreign exchange sales by exporters.

The news was also absent from the main news and talk shows of Russian state television, as well as from the websites of state media outlets.

The refusal to link the ruble’s slide to events unfolding just 530 km (330 miles) southwest of Moscow illustrates a push in Russia to prevent bad economic news from reaching the general public.

Russia has sought to portray the $2 trillion economy as an increasingly invincible bastion of self-sufficiency facing the massive pressure of Western sanctions, the most punitive ever imposed on a major economy.

“Our finances are strong,” Finance Minister Anton Siluanov said in a speech on Wednesday.

“It is important for us to build this financial shield so that all the financial pressures that someone wants to put on us will be diverted… This is exactly what is happening now,” said Siluanov.

A trader, who spoke on condition of anonymity, suggested that the heavy selling of rubles in recent days could also be linked to an upcoming halt to overseas money transfers by Austria’s Raiffeisen Bank.

As the ruble started to recover on Wednesday, some analysts tried to brush aside any link between the attack and the ruble’s fall, while others predicted it would stabilize soon.

Linking the currency’s decline to the Kursk incursion, economist Mikhail Belyaev said, was an approach that “in my opinion … has no connection to reality.”