The rouble edged away from its weakest mark since late January yesterday in topsy-turvy trade, attempting to recover from its sharpest drop in nearly two years on Friday, and stocks dived as players ditched Russian assets on renewed fears of an imminent invasion of Ukraine.
Moscow has dismissed that scenario as Western propaganda, and repeatedly denied plans to invade, but acknowledged that relations with the United States are “lying on the floor”. The rouble was 0.5% stronger against the dollar at 76.74, swinging from 78.29, a level last seen on January 28, to as strong as 76.35 during a volatile session.
The rouble had weakened sharply last month to a near 15-month low of 80.4125 on the Ukraine crisis.
It had pared those losses in recent weeks, hitting its strongest level on Thursday since early 2022, before falling again on Friday after the United States urged all its citizens to leave Ukraine within 48 hours. “It makes sense to eliminate risks related to Russia to a maximum and to not take any active moves with Russian assets before the risk of a military scenario is gone,” said Evgeny Suvorov, an economist at CentroCreditBank.
Against the euro, the rouble strengthened 0.8% to 86.87 after touching its weakest level since January 27 of 88.6950.
Ukraine and Russia’s dollar-denominated government bonds tumbled to the lowest of the crisis so far. Yields on Russia’s benchmark 10-year rouble-denominated OFZ bonds hit 10.17%, their highest since February 2016.
Yields move inversely to prices.
Even though the rouble is vulnerable to geopolitical fears, it retains fundamental support from Russia’s record strong current account surplus fuelled by high commodity prices.
