RUSSIAN RUBLE FALLS 9 PERCENT AGAINST DOLLAR AFTER UKRAINE ATTACK

Thu 24 February 2022:

After Russia fired missiles at several Ukrainian cities and landed troops on the south coast, the ruble plunged to a record low on Thursday, while the euro plunged to a multi-year low against the Swiss franc.

In addition, riskier commodity-linked currencies like the Australian dollar also tanked as Ukraine said Russia had launched a full-scale invasion.

The dollar rose nine per cent against the ruble, which has been battered lately in the wake of worries about the effects of the sanctions on the Russian economy, while the Moscow Stock Exchange plunged almost 14 per cent after trading was suspended earlier in the day. The country’s central bank said it was intervening to “stabilise the situation”.

“To stabilise the situation on the financial market, the Bank of Russia has decided to start interventions in the foreign exchange market,” the central bank said in a statement, adding that it and other financial institutions: “have clear action plans for any scenario.”

While explosions were reported in the Ukrainian capital of Kyiv and gunfire was heard near Kyiv’s main airport, safe havens such as the yen and dollar were in demand.

With a fall of 0.84 per cent to $1.1209, the euro reached its lowest level since January 31.

Euro depreciated as much as 1.28 per cent versus other traditional haven currencies, hitting a nearly one-month low of 128.37 yen and as much as 0.84 per cent versus the Swiss franc, which reached 1.0292, the weakest since May 2015.

There was a 0.90 per cent drop in the Australian dollar to $0.7167, while the New Zealand dollar declined by 1.00 per cent to $0.6706.

“The situation certainly looks like it’s going to get worse before it gets better, and that means the commodity currencies can weaken,” said Joseph Capurso, a strategist at Commonwealth Bank of Australia.

“If things get real bad,” Aussie could test $0.70, and if the euro is poised to fall “quite a bit more,” he said.

Sterling was a bit more resilient, declining 0.41 per cent to $1.3490, the lowest since February 15.

For the first time since January 31, the US dollar index, which measures the greenback against six major peers, rose as much as 0.60 per cent to 96.762.

Besides its status as a safe haven, the dollar has also been boosted by expectations that the Federal Reserve will begin raising rates next month, although the rising risk related to Ukraine forced traders to lower their expectations from 25 per cent earlier in the day to 16 per cent.

SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES

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