MOSCOW: The Russian rouble and markets held their breath on Wednesday as they awaited the outcome of President Vladimir Putin’s meeting with U.S. special envoy Steve Witkoff at the Kremlin.
Witkoff and Putin had “useful and constructive” talks, a Kremlin aide Yuri Ushakov said, two days before the expiry of a deadline set by President Donald Trump for Russia to agree to peace in Ukraine or face new sanctions.
The rouble was flat at around 80 to the dollar, according to data compiled by LSEG based on over-the-counter quotes. It weakened by 0.2% against China’s yuan at the Moscow Stock Exchange. Russia’s main stock market index was down 0.15%.
“The market is awaiting the outcome of the meeting between Vladimir Putin and Steve Witkoff,” T-Bank’s analysts said.
Many analysts believe that the rouble is overvalued and awaiting a trigger to weaken.
The Russian currency rallied by up to 45% against the dollar earlier this year, partly thanks to expectations of a thaw in the relationship between Russia and the U.S. as well as hopes for a peaceful settlement in Ukraine.
Options on the table for Trump to put more pressure on Russia if Witkoff returns empty-handed include new sanctions against Russia’s energy and banking sectors and possible sanctions or trade tariffs on buyers of Russian oil.
Kremlin earlier said that Russia had developed an immunity to sanctions thanks to long experience. However, the latest round of U.S. sanctions against a Russian bank, which handled payments for energy, imposed last year, led to the rouble’s slide.
“In the coming days, the currency market will be waiting for news from the visit of the U.S. President’s special representative and clarification of the situation regarding possible U.S. sanctions,” said PSB Bank’s Evgeny Loktykhov.
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