The Russian ruble slips to levels not seen since April as Moscow says sanctions are putting pressure on the economy

The ruble fell sharply against the US dollar on Wednesday, amid signs that the latest wave of sanctions by Western countries is beginning to affect Russia’s economy.

Russian Finance Minister Anton Siluanov told journalists on Tuesday that the G7 economies, as well as the European Union and Australia, imposing a $60-per-barrel oil price cap are hurting Russia’s export earnings.

This could push Russia’s budget deficit beyond the projected 2% of GDP in 2023, Reuters reported on Tuesday. On the back of losses that intensified as US markets opened, the ruble USDRUB, +3.14%, tumbled 3% to $72.45 early Wednesday.

“Is a bigger budget deficit possible? It is possible if the earnings are lower than planned. What are the risks in the coming year? Price risks and constraints,” Siluanov told reporters in approved comments.

The sanctions, which came into effect on December 5, were imposed in retaliation for Moscow cutting off oil supplies to Europe and to limit Russia’s funding of its military campaign in Ukraine.

The Russian ruble has consequently fallen, shedding some of its summer gains as it benefited from higher oil prices.

“The ruble will continue to weaken because there is no fundamental demand [for it]’ Vladimir Milov, a Russian opposition politician, told the New York Times on Monday.

Meanwhile, Russia’s central bank is likely to dump the US dollar and buy Chinese yuan in the foreign exchange market to reduce its reliance on Western finance, Reuters recently reported.

This year, trade between yuan and ruble RUBCNY, -2.84% on the Moscow Exchange has increased from 1% to 40-45%, while share of dollar-ruble trade has halved to 40%.