Russian President Vladimir Putin gave the nod to a deal that allows UK oil giant Shell to transfer more than $1.2 billion in proceeds from its pipeline project sale abroad. The move, along with the West’s sanctions and a series of international firms exiting Russia, pushed the ruble down to a 1-year low.

Putin’s Approval of Shell Deal Adds to Ruble’s Woes

The Russian ruble has fallen to a 12-month low against the US dollar as sanctions against Moscow and foreign firms fleeing the country continue to weigh on its economy. The Russian currency was trading at around 81 rubles to the dollar on Friday at the time of the writing.

The steep decline in the ruble comes from a combination of factors, including the end of the Russian tax year – a period when large exporters trade foreign currency for rubles to satisfy their payment obligations to the state budget. Meanwhile, the Russian money is also under pressure from trade inflows as imports pick up while exports continue to tumble.

Most recently, analysts attributed the ruble’s decline to President Vladimir Putin’s approval of a deal that enables UK energy company Shell to sell its stake in the Sakhalin-2 oil pipeline project in Russia’s Far East. According to a local Russian outlet Kommersant, Putin allowed Shell to sell its holdings in the Sakhalin-2 to Russia’s Novatek PJSC – the second-largest natural gas producer in the country.

If true, the deal allows Shell to convert and repatriate $1 billion rubles from the pipeline project sale. In the wake of Western sanctions against Russia, Putin assembled a special commission that obliges foreign firms to request approval to sell assets in the country. However, in the face of its efforts to prevent foreign flight, the Russian economy sustained around $15 billion to $20 billion in losses from foreign companies exiting the country in the past year.

Cooling Labor Market Puts Pressure on the Dollar

While the ruble has lost significant ground against the dollar in the past year, the greenback has weakened against the euro and sterling this week. The sterling rose to its highest in 10 months against the dollar, while the euro hit a two-month high.

The dollar’s slump comes after weaker-than-expected economic data raised hopes among investors that the Federal Reserve may be finally done with its monetary policy tightening cycle. The report by the Labor Department revealed that job openings fell to the lowest level in almost two years, indicating that the labor market, one of the key sources of US inflation, was running out of steam.

The report suggests that the Fed’s series of interest rate hikes are starting to affect the red-hot labor market. The US central bank has hiked interest rates nine times over the past year to reduce record-high inflation.

This article originally appeared on The Tokenist

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