Ruble Drops on German Novichok Claim
The ruble lost value on September 2 after the German government said it had "unequivocal proof" that Russian opposition leader Alexei Navalny was poisoned with a Soviet-era Novichok nerve agent.
Navalny fell seriously ill on August 20 on board a plane returning to Moscow from Siberia, and was later transferred to Germany for treatment.
The spokesman for German Chancellor Angela Merkel issued a statement saying that toxicology tests at a German army laboratory showed the "doubtless presence of a nerve agent from the Novichok group" in Navalny's system.
"The German government condemns this attack in the strongest possible terms," he said. "The Russian government is urgently requested to explain what happened." Navalny has been in an induced coma, according to media reports, which said he was being treated with the same chemicals that cured the Skripals of Novichok poisoning in the UK in March 2018.
Navalny, leader of the Russia of the Future party, is Russia's most prominent opposition politician. He is also an anti-corruption activist, having led many investigations into graft among high-ranking Russian officials and businessmen with links to the Kremlin.
The ruble peaked at 75.7 to the dollar at 16:00 UK time, rising from 74.4 before the German statement was released. The central bank sold foreign currencies to support the ruble at the height of the oil market crisis in March. But the currency has been steadily shedding value since April, when the bank stopped intervening.
A weak ruble is a double-edged sword for Russian oil and gas producers. On the one hand the ruble value of their export revenues increases, while on the other, their foreign currency-denominated debts inflate.
The revelation about Navalny's poisoning will make it harder for Germany to defend its strong backing for Russia's Nord Stream 2 pipeline, although Berlin is unlikely to drop its support for the project, which it insists is commercial and not political. The Novichok attack could also lead to the EU and the US imposing more sanctions on Russia, depending on how developments unfold. A bill imposing extra sanctions on Nord Stream 2 is already making its way through US Congress.