The Russian ruble is at its lowest level in a year on speculation Shell is going to repatriate $1 billion of recent earnings

• The Russia ruble fell to its lowest since April 2022 amid speculation Shell could repatriate $1.2 billion of the currency.

• This comes amid a growing liquidity crunch and foreign flight on the back of Western sanctions.

• Meanwhile, the Chinese yuan recently surpassed the US dollar as the most traded currency in Russia.

Recent reports that Shell plans to repatriate more than $1 billion in ruble earnings has led to the latest leg down in the Russian currency, pushing it past a psychologically important level of 80 rubles per dollar.

Trading at 81.6 rubles on Thursday, this marks the currency's lowest level since April 2022.

"The process for approving assets sales by foreigners is opaque," Dmitry Polevoy, of Moscow's Locko-Invest, told Bloomberg. "With liquidity in the currency market low, it leads to increased volatility for the ruble."

Russian President Vladimir Putin has allowed Shell to receive around $1.21 billion worth of rubles for its stake in the Sakhalin-2 project, a Far East project the company announced it would quit on the back of Russia's invasion of Ukraine.

When the war broke out in February of last year, the ruble fell to 130 per US dollar, and Putin required foreign companies to receive permission in order to sell Russian assets. And despite a slew of sanctions and financial penalties from the West, however, the currency rebounded in part due to resilient energy exports.

But after hitting a June peak of 50 per dollar, energy earnings have begun to wear out and dollar demand grew, leading to a growing liquidity crunch.

Meanwhile, capital has continued to flee, with Bloomberg reporting that total asset sales from departing companies amounted to between $15 and $20 billion last year.

This week, the Russian branch of Raiffeisen Bank International AG has banned dollar transfers for anyone besides premium clients, and lifted the minimum transfer amount to $20,000.

Further, the Chinese yuan has topped the US dollar as the most traded currency in Russia, as Western sanctions make it harder for Russian institutions to make dollar-based transactions.

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