MOSCOW: The rouble strengthened on Tuesday, as Russian President Vladimir Putin and his US counterpart Joe Biden began a much-anticipated video call, with the threat of new sanctions against Moscow lingering over the talks. Biden will tell Putin that Russia and its banks could be hit with the toughest economic sanctions yet if it invades Ukraine, US officials said before the video conference, news that sent the Russian currency into the red in late trading on Monday.
By 1602 GMT, the rouble was 0.4% stronger against the dollar at 74.00. It rose 0.8% to 83.22 versus the euro. Yields on the government’s 10-year benchmark treasury OFZ bonds were under pressure as well, adding seven basis points to 8.59%, and remaining near their highest levels since early 2019 as geopolitical tensions rise.
Kyiv and the West say Russia is amassing troops near Ukraine. Russia denies any such plans and says it moves troops within its borders as it sees fit. The Kremlin said on Tuesday it was not expecting a breakthrough at the talks and urged people to remain calm despite mounting tensions. Latvia said Russia could be cut off from the SWIFT payment system used by banks all around the world, a move that would exacerbate Russia’s high inflation problem, said Max Castle, a fixed income portfolio manager at Mediolanum Irish Operations.
“That would cause a severe economic downturn in Russia, and even for Putin the cost would be too great,” he said. “That doesn’t mean Putin will not make more moves and become more aggressive.”
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