- Russian Rouble (RUB) falls to fresh record lows
- Russia assets across the board see little to no demand
- US Dollar (USD) falls versus major peers after 4 days of gains
- Fed expected to raise interest rates next week
The US Dollar Russian Rouble (USD/RUB) exchange rate is extending gains again on Tuesday, adding to 20% gains across the previous week. At 10:00 UTC, USD/RUB trades 1.3% at 137.37 after rising as much as 144 a fresh record, earlier in the session.
The Russian Rouble has fallen to a fresh all-time low in offshore trade. Local markets will remain closed until at least Wednesday for a bank holiday. Stocks last traded on the Moscow bourse on February 25
The Rouble has shed more than 40% of its value against the US Dollar since the start of the year with losses accelerating as Russia invaded Ukraine on February 24 and as the West applied crippling sanctions.
Since then, it has become very difficult to trade Russian assets as liquidity has completely dried up. There is pretty much infinite supply and very little demand. Trading volumes on the Rouble have collapsed by more than 80% of what they were at the end of last month.
The US Dollar is rising versus the Rouble but is falling versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades -0.16% at the time of writing at 99.13, after four straight days of gains.
The US dollar has been well supported on safe-haven flows which pushed the world’s reserve currency over 99.00 for the first time since May 2020.
Today, the US dollar is creeping southwards, investors continue to digest Russia, Ukraine developments, and the potential fallout on the global economy. Oil and commodity prices across the globe are lifting concerns of slowing growth and higher inflation -stagflation.
Federal Reserve could hold back from acting as aggressively to tame rising inflation should growth slow considerably.
The Federal Reserve monetary policy meeting is next week, with the US central bank widely expected to hike interest rates by 0.25% less than the 0.5% which had been expected before Russia invaded Ukraine.
