The Russian rouble plunged to over three-week low against the US dollar in Moscow trade on Monday as oil prices declined and after the Russian currency lost the support of a favourable month-end tax period.

The rouble was down 1.1 percent versus the dollar in early trading at 62.30 after earlier reaching 62.4875, its lowest level since July 7. In relation to the euro, it has dropped 1.9 percent to trade at 63.66. The rouble nonetheless lost over 7% against the dollar last week despite high oil prices and a healthy current account surplus.

The conclusion of the tax and dividend period caused the rouble to continuously decline, according to Dmitry Polevoy, head of investment at Locko Invest. Last week was the end of the tax payment period, during which exporting businesses typically convert their foreign currency earnings to pay their domestic liabilities.

In the near future, the rouble may momentarily drop to between 63 and 65 versus the dollar, according to Polevoy. The market is also waiting for news that the government would shortly modify and reintroduce Russia's budget rule, which directs extra oil earnings to a rainy-day fund with a new cut-off price.

To stop the rouble from strengthening, officials may also use currency interventions. Due to efforts taken to protect Russia's financial system from Western sanctions put in place after Moscow launched soldiers into Ukraine on February 24, the rouble has been the world's best-performing currency thus far this year.

These limitations include those on the withdrawal of foreign currency deposits by Russian households. Russia's biggest export, Brent crude oil, which serves as a benchmark globally, was down 0.5 percent at $103.4 per barrel as of last week. The MOEX Russian index, which is based on the rouble, was down 0.6 percent at 2,200.9 points, while the dollar-denominated RTS index fell 1.5 percent to 1,112.9 points.

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