Rouble Rebounded From Its Lowest Level in History

On Thursday, the Russian rouble recovered from all-time lows as the country’s central bank announced FX interventions after Russia’s longtime leader Vladimir Putin ordered Russian forces to invade Ukraine, a move expected to trigger harsh sanctions against the Russian Federation.

On Thursday, the Russian Federation armed forces fired missiles at several Ukrainian cities. Russian troops also landed on Ukraine’s south coast. Russian forces attacked Ukraine after Vladimir Putin authorized what he called a special military operation in the east.

The rouble dropped 3.8% to 84.27 against the U.S. dollar as of 09:32 GMT. At some point, the rouble fell to 89.60.

Against the euro, the Russian currency fell 3.2% to trade at 94.55, earlier hitting an all-time low of 101.03 on the interbank market. 

For the first time in a long time, the central bank said it will support the rouble with foreign currency interventions to shore up financial stability. Thanks to its gold and forex reserves, the Bank of Russia could ease pressure on the rouble.

Rouble and challenges

The Russian currency was expected to gain support from the country’s economic recovery and high prices for oil and gas. However, sanctions and risk aversion leave little for its recovery. 

Apart from the rouble, shares and bonds fell as investors took stock of Russia’s move into Ukraine and other challenges.

Yields on Russian benchmark 10-year OFZ rouble bonds reached 10.93%, their highest since early 2016.

Western countries and Japan have already taken measures against Russia. They imposed sanctions on Russian banks and individuals in response to Russia’s recognition of separatist regions in Eastern Ukraine. Furthermore, they promised tougher sanctions should Russia invade.

The dollar-denominated RTS stock index dropped 28% to 885.05 points, its lowest since early 2020. The rouble-based MOEX Russian index fell 24% to 2,345.6 points.