Russia: Aid for the ruble but ‘dip’ over 3% in the stock market

LAST UPDATE: 11.00

The ruble regained some ground on Monday, recovering slightly from the sharpest fall in nearly two years on Friday, but stock indices plummet amid fears of an impending invasion of Ukraine.

Moscow, for its part, rejects this scenario as Western propaganda, but has confirmed that bilateral relations with the United States are in a bad phase.

It is noted that the ruble strengthened by 0.9% against the dollar to 76.50, after reaching 78.29 earlier, a level that was last observed on January 28.

It is noted that the ruble had weakened sharply last month to a 15-month low of 80.4125 due to the crisis in Ukraine.

Against the euro, the ruble strengthened by 0.9% to 86.78 after reaching its weakest level since January 27 at 88.6950.

The currency had reduced those losses in recent weeks, reaching its strongest level since early 2022 on Thursday, before falling again on Friday, after the US called on all its citizens to leave Ukraine within 48 hours.

“It makes sense to eliminate the risks associated with Russia as much as possible and not to move with Russian assets until the risk of a military scenario disappears,” said Evgeny Suvorov, an economist at CentroCreditBank.

Although the ruble is vulnerable to geopolitical fears, it maintains fundamental support from Russia’s strong current account surplus amid high commodity prices. It is also supported by the central bank’s monetary tightening, which, in theory, makes investing in ruble assets more attractive.

Russia raised its key interest rate to 9.5% last week and said a further increase was possible.

Russian stock indices, however, are falling today, reaching their lowest level since late January.

In particular, the RTS index slips 5.18% while the MOEX index records a “dip” of 3.85%.

“Russian stocks are again trading under pressure against the backdrop of increasingly worrying news headlines about the crisis in Ukraine,” said investment management company Aton.