The Russian ruble weakened on Tuesday to return to a minimum of more than 14 months against the dollar, after a wave of selling in the previous session, in a context of sensitivity of Russian assets to the tensions between Moscow and the West over Ukraine.
The volatility has hit Russian markets in recent weeks amid fears in the West that Russia is poised to invade its neighboring country, something Moscow has repeatedly denied. The West has threatened sanctions with profound economic effects if Russia makes an incursion.
The OTAN Russia said on Monday it was putting forces on standby and bolstering its presence in eastern Europe with more ships and fighter jets, an operation Russia says is due to Western “hysteria” in response to its buildup of troops along the border. with Ukraine.
The ruble weakened 0.3% against the dollar to 79.01, paring earlier gains. On Monday it fell to 79.50, the ruble’s weakest level since November 3, 2020.
Against the euro, the ruble gained 0.1% and traded at 89.01, recovering from its weakest point since July 2021, touched on Monday.
“A corrective bounce is not out of the question given the magnitude of yesterday’s selling. However, US-Russian tensions remain as hot as ever and the trend would suggest further weakness ahead,” BCS Global said. Markets in a note.
The ruble briefly benefited from the central bank of russia said it would stop buying foreign exchange on Monday, before losses resumed. That message likely prevented the ruble from weakening beyond 80 against the dollar, said Dmitry Polevoy, chief investment officer at Locko Invest.
Under a tax rule adopted in 2017 to strengthen the National Wealth FundRussia buys foreign currency when oil prices are high and sells when prices fall below $44 a barrel, protecting the ruble from oil price swings.
Brent crude, the world benchmark for Russia’s top export, rose 0.7% to $86.87 a barrel.
For the second week in a row, the Finance Ministry canceled weekly OFZ treasury bond auctions due on Wednesday in an effort to help stabilize the market, blaming persistent volatility in financial markets.