© Archyde.com/Maxim Shemetov
FILE PHOTO: Russian ruble coins
MOSCOW, Feb 14 (Archyde.com) – The ruble clawed back some ground on Monday, rebounding slightly from its biggest drop in nearly two years on Friday, but Russian stocks sank as assets were sold on renewed fears of an impending invasion of Ukraine.
Moscow has dismissed that scenario as Western propaganda, while acknowledging that bilateral relations with the United States are “on the rocks.”
The ruble rose 0.9% against the dollar to trade at 76.50 by 0758 GMT, having hit 78.29 in early trading, a level last seen on Jan 28. .
Last month, the ruble weakened sharply to a 15-month low of 80.4125 due to the Ukraine crisis.
In recent weeks it had trimmed those losses, hitting its strongest level since early 2022 on Thursday, before falling again on Friday after the US urged all its citizens to leave Ukraine within 48 hours.
“It makes sense to eliminate Russia-related risks as much as possible and not take any exposure to Russian assets before the risk of a military scenario is gone,” said Evgeny Suvorov, an economist at CentroCreditBank.
Against the euro, the ruble strengthened 0.9% to 86.78, after touching its weakest level since January 27, 88.6950.
Russian dollar-denominated sovereign bonds fell as much as 3.1 cents and hit their lowest level since the peak of COVID-19 pandemic sales in March 2020. Ukraine’s government bonds fell around 10%.
Although the ruble is vulnerable to geopolitical fears, it retains fundamental support from Russia’s strong current account surplus amid high commodity prices. It is also supported by the Russian central bank’s monetary tightening, which, in theory, makes investments in ruble assets more attractive.
Last week, Russia sharply raised its key interest rate to 9.5%, signaling that a further hike is likely.
Brent crude, the world benchmark for Russia’s top export, rose 1.3% to $95.69 a barrel, hitting its highest in more than seven years.
Russian stock indices fell, hitting their lowest level since late January.
The dollar-denominated RTS index fell 2.8% to 1,429.2 points. Russia’s ruble-denominated MOEX index fell 2.2% to 3,470.4 points.
“Russian equities are trading under pressure again against the backdrop of increasingly worrying headlines surrounding the Ukraine crisis,” investment management firm Aton said.
(Reporting by Andrey Ostroukh and Alexander Marrow; editing by Jane Wardell and Andrew Cawthorne; translation by Darío Fernández)