The Rouble falls as Russia-backed rebels got involved

The Russian rouble fell in volatile trade on Thursday. It happened after Russian-backed rebels and Ukrainian forces exchanged charges of releasing shells in eastern Ukraine. It sends market players running for cover.

Kyiv said the incidents in eastern Ukraine seemed like a provocation when Russian troops massed on the frontier.

On Thursday, Russia rejected unfounded accusations by the United States and NATO that it was not withdrawing its forces near the border. The country said that it takes time to wind down military exercises. Russia previously denied any plans to invade.

By 1340 GMT, the rouble was 1.1% weaker against the dollar at 76.14, moving further away from 74 touched in the previous session. It was earlier falling as far as to 76.7176 in volatile trade.

The unit had weakened 0.8% to trade at 86.48 versus the euro.

Overview of the Russian Rouble and other currencies

BCS Global Markets said in a note that the jury is out as to whether the danger of invasion has de-escalated, alarming risk appetite.

This week, the rouble recovered after its sharpest drop in two years on Friday. It resulted from Western nations’ calls to their citizens to depart Ukraine.

Five-year credit default swaps for Russia jumped by around 14 basis points from Wednesday’s close to 228 bps. Data from IHS Markit showed that it was still some way off the more than 275 bps hit on Monday.

The West has threatened severe sanctions if Russia invades.

The most potent measure for NATO members would be U.S. sanctions cutting off Russian state banks from the dollar.

A global benchmark for Russia’s major export, Brent crude oil went down 1.1% at $93.84 barrel.

The dollar-denominated RTS index appeared down 4.2% to 1,462.1 points. The rouble-based MOEX was 3.2% lower at 3,532.2 points.

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