Russian Ruble Reverses Losses

As markets awaited a new round of talks between Moscow and Kyiv, the Russian ruble surged on Monday; reversing its earlier losses. The MOEX benchmark stock index recovered to levels last seen before Russia launched hundreds of troops into Ukraine.

Investors were keeping an eye on events surrounding Russia’s “special military operation” in Ukraine, which began on February 24, and the possibility of further Western sanctions against Moscow, on top of the previously imposed exceptional penalties.

The ruble was 0.8 percent firmer against the dollar at 83.25 (RUBUTSTN=MCX), erasing earlier losses but still weaker than the 80.3325 high reached on Friday.

The ruble rose 1.8 percent to 91.33 (EUR RUB) against the euro.

It moved away from an all-time low of roughly 132.42 set in Moscow trade on March 10.

Capital controls and President Vladimir Putin’s demand that European customers of Russian natural gas pay in rubles have boosted the ruble in recent weeks. However, when the prospect of a supply suspension faded, Europe pledged to stand united against Moscow’s demands.

In a report, Promsvyazbank analysts predicted that the ruble would trade in 80-90 dollars during the following two weeks.

The market was also scrutinizing Russia’s ability to service its foreign debt. Volatile trading resumed in the stock market; however, nearly all blue chips were in the black after the market returned last week after a nearly month-long absence. The RTS Index (RTSI), denominated in dollars, increased by 1.4 percent to 1,047.7 points. The ruble-based MOEX Russian index (IMOEX) was up 0.3 percent at 2,769.2 points; it reached a high of 2,835.46 on February 22.

In a statement, Finam brokerage predicted that the MOEX index would continue to rise toward a target of roughly 3,080 points.

VTB (VTBR), Russia’s second-largest sanctioned banking, beat the market on the day, rising 7.9%. Sberbank, the world’s largest lender, was up 4.5 percent (SBER).