Rouble Steady in Moscow, Crashing Everywhere Else

On Monday, the Russian rouble fell more than 15% against the dollar and euro at the market open in Moscow. However, central bank intervention stopped the slide after it hit a new low in Asian trade following additional sanctions on Russia. The rouble was trading at 95.48 to the US dollar at 0800 GMT, down 15% from Friday’s close; at 107.3550 to the euro, down 15.4%, as central banks sold foreign currency to prevent losses in Moscow trade. The electronic currency trading platform EBS had already hit a record low of 120 to the dollar.

On Monday, the Russian central bank boosted its benchmark interest rate to 20%; this was an emergency attempt to defend the rouble and combat inflationary pressures. Since Russia’s invasion of Ukraine began on February 24, the central bank has begun meddling in currency markets. Moscow refers to its efforts in Ukraine as a “special operation”. It claimed that they are not intended to take the land; instead, they want to weaken Ukraine’s military capabilities and catch what it considers to be dangerous nationalists. Thanks to the central bank’s interventions, the rouble rose from a record low to approximately 114 per dollar on EBS at around 0730 GMT. Analysts at Promsvyazbank predict that the Russian currency will fluctuate between 100 and 120 rubles per dollar during the day.

Moscow Stock Market Under Pressure

The Moscow Exchange’s stock market was shut down. Russian markets have suffered because of increased sanctions imposed by Western nations in response to Russia’s invasion of Ukraine, the worst assault on a European state since World War II. On Sunday, President Vladimir Putin ordered his military leadership to raise the alert level for nuclear-armed forces. On Sunday, Russia’s central bank unveiled a flurry of measures aimed at bolstering local markets; it is hurrying to deal with the consequences of sanctions that will prevent certain banks from using the SWIFT international payments system. The central bank said that it will resume domestic gold purchases, establish a no-limit buyback auction, and relax limitations on banks’ open foreign currency balances.

Before the Moscow Exchange opened, Rabobank analysts warned that the sanctions on currency reserves would erode the rouble’s minimal support. “Even gold isn’t liquid if no one can swap it for foreign currency. Today, the rouble will lose value; “A fall in the rouble looks imminent on Monday morning,” Ray Attrill, head of FX strategy at National Australia Bank (OTC: NABZY), said in a note on Sunday, adding that the weekend developments had elevated the probability of a Russian debt default. In Moscow, the rouble holds steady against the dollar, but it falls to a new low outside the country.

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