Currency falls beyond 110 to the US dollar for the first time since just after Ukraine invasion, Russian state media report.

The Russian rouble has dropped to its lowest level in more than 32 months amid geopolitical risks over the escalation of the war in Ukraine and new United States sanctions.

The currency fell beyond 110 to the US dollar on Wednesday for the first time since March 16, 2022, the Russian state news agency RIA Novosti reported. That was three weeks after Moscow launched its full-scale invasion of Ukraine.

According to London Stock Exchange Group data, the rouble also broke through the 15 mark against China’s yuan, also its lowest level since March 2022.

The fall of Russia’s currency has been compounded by a fall of more than 20 percent in its stock market so far this year as investors move their savings from stocks into deposits.

Brokerage analysts BCS told the Reuters news agency that the “market is awaiting the financial authorities’ reaction for the rouble’s devaluation”, adding that forex purchases “resembled panic in an environment of uncertainty”.

Analyst Sofya Donets from T-Bank told Reuters that measures by authorities could include “increasing foreign currency sales by the central bank through adjustments to the parameters of operations under the budget rule and additional capital controls”.

Analysts predicted the rouble could hit 115 to 129 to the dollar by the end of 2024.

However, on Tuesday, Russia’s finance minister dismissed concerns over the rouble’s drop, saying it would be “very conducive to exports”.

While a weak rouble would make Russia’s exports cheaper, Russians would have to pay more for imported goods, possibly increasing already high inflation in the country.

The rouble’s slide was exacerbated by the new sanctions on Russia’s financial sector, which disrupted foreign trade payments, especially for oil and gas, creating a physical shortage of currency in the Russian market, analysts said.

Most major Russian banks are under US sanctions and cannot carry out bank transactions in dollars, but the only remaining option to trade foreign currency is to import large quantities of dollars in cash.