Russian ruble rebounds after slipping on geopolitical issues – Markets
MOSCOW: The Russian ruble rebounded on Wednesday, gaining more than 1% against the dollar the same day after rising geopolitical concerns, including the strengthening of the Russian military near Ukraine which caused the currency to fall on Tuesday.
At 12:36 GMT, the ruble was 1% stronger against the dollar at 72.39, moving away from its weakest point since September 21 – which it touched on Tuesday – except for a drop of a few seconds on the Moscow Stock Exchange on October 22 which was most likely caused by a trading error.
It gained 0.9% to trade at 81.97 against the euro.
After hitting its highest level since mid-2020 at 69.21 against the dollar in late October, the ruble came under selling pressure last week after a Bloomberg report said U.S. officials told their counterparts of the European Union for their concerns about a possible Russian military intervention in Ukraine.
Russia’s risk as measured by five-year credit default swaps that reflect the cost of insuring sovereign debt exposure eased slightly after climbing to 101.522 basis points, the highest since April 22.
Russian troop movements near the border with Ukraine raised fears of a possible attack. But Moscow dismissed these suggestions as inflammatory and complained about the increase in activity in the region by NATO.
Matthew Ryan, senior market analyst at Ebury, said he was bullish on the ruble due to Russia’s strong macroeconomic fundamentals and a growing differential between the Bank of Russia and most other major central banks.
Other geopolitical concerns include fallout from a Russian-led anti-satellite missile test and the German energy regulator’s suspension of the Nord Stream 2 pipeline approval process.
“The headlines on NS2 may well be seen as an offshoot of the growing tension between Western Russia, adding to the sourness of ‘Russian’ sentiment,” BCS Global Markets said in a note.
Brent crude oil, a global benchmark for Russia’s main export, fell 0.5% to $ 81.99 a barrel.
Russian stock indices were mixed.
The RTS index denominated in dollars rose 1.3% to 1,789.9 points. The Russian MOEX index, based on the ruble, lost 0.2% to 4,112.6 points.