The Rouble Sell-Off Eases, the Dollar Falls

On Tuesday, the rouble gained some ground as global currency markets remained relatively calm amid the fast-moving Ukraine situation; this caused the dollar to fall. Financial markets have been rocked in recent days by Russia’s invasion of Ukraine, the largest attack on a European state since World War II, and the ensuing Western sanctions, which include cutting some Russian banks off from the SWIFT financial network and limiting Moscow’s ability to deploy its $630 billion in foreign reserves.

On Tuesday, global financial markets appeared to be regaining their calm, with Wall Street futures marginally higher. Some commentators ascribed the calmer atmosphere to Monday’s ceasefire negotiations between Russia and Ukraine, which failed to produce a resolution. The rouble was trading at 93.4 per dollar; it recovered virtually all of Monday’s losses thanks to an emergency rate rise by Russia’s central bank after the currency hit a historic low of 120 per dollar. Despite this, the rouble was down nearly 30% from its peak this year.

Global Currency Market Fluctuations

The US dollar, which had risen last week due to safe-haven flows, has dropped marginally, with the dollar index now sitting at 96.707. The euro has also stabilized, trading at $1.12145, down less than 0.1 percent on the day.

The safe-haven yen has retreated after its greatest surge in over seven weeks versus the dollar on Monday. The euro, meanwhile, has dropped to its lowest level against the safe-haven Swiss franc since 2015; the pair traded at 1.0267. In February, the Swiss National Bank’s sight deposits remained unchanged, implying that the central bank had given up on slowing the franc’s gain. According to a Deutsche Bank (DE: DBKGn) index, currency volatility was highest since late 2020.

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