MOSCOW: The rouble fell on Friday, a day after hitting its highest mark since early January, as geopolitical risks tied to tensions over Ukraine offset the lift from the central bank’s interest rate increase and high oil prices.
The rouble, which has been rebounding from the nearly 15-month low of 80.4125 it hit against the greenback during a sell-off last month sparked by Western concerns that Russia could invade Ukraine, was down 1.2% to 75.90 by 1425 GMT. It traded at 74.2550 on Thursday, which was its strongest level since Jan. 3.
The rouble’s weakness on Friday coincided with advisories by some Western countries that their citizens leave Ukraine as soon as possible in the face of a possible military conflict with Russia. Moscow has denied plans to invade its neighbour.
Britain said on Thursday the “most dangerous moment” in the West’s standoff with Moscow appeared imminent, as Russia held military exercises in Belarus and the Black Sea following the buildup of its forces near Ukraine.
“Shuttle diplomacy by the West and Russia has thus far brought more hardliner rhetoric than olive branches, prompting an uptick in sabre rattling,” BCS Global Markets said in a note.
Geopolitical tensions proved to be more important for the market than the Bank of Russia’s decision to raise its key interest rate by a hefty 100 basis points to 9.5%, a move that had been largely priced in.
Versus the euro, the rouble eased 0.6% to 86.45 on Friday. .
Russian equities have also come under renewed pressure, remaining sensitive to tensions over Ukraine.
Russia’s dollar-denominated RTS share index fell 4.4% to 1,479.0 points, while the rouble-based MOEX index was 2.5% lower at 3,566.6 points.
Shares in oil major Rosneft were down 1.6%, performing better than the broader market, after reporting record net income for 2021 that still missed forecasts.
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