Ruble Retreats to Three-Month Low as Ukraine Crisis Continues

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Ruble Retreats to Three-Month Low as Ukraine Crisis ContinuesThe ruble continued with its decline for the fourth day, touching its lowest trough in three months as Ukraine crisis escalated on news that Russian soldiers are advancing close to the Ukraine border and after the government considered cancelling a planned bond sale.

The ruble tumbled nearly 0.1 percent to 35.7885 per dollar at 12:50 p.m. Moscow time. The currency appreciated 0.2 percent to trade at 47.933 per euro and advanced 0.1 percent against the central bank’s benchmark basket of euros and dollars to 41.2491.

The Russia’s Finance Ministry was scheduled to list the terms of its latest bond auction today after earlier cancelling the sales over the past two weeks after the yield on the bond that matures in February 2027 surged past 9 percent. The yield increased 6 four basis points to 9.65 percent.

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The ruble has taken a hit after the European Union announced new sanctions targeting Russia’s financial, defense and oil and gas sector. Ukraine said that Russia had gathered 33,000 soldiers and 160 tanks at its border as it continues its campaign against Russian-backed separatists in the cities of Luhansk and Donetsk.

“In the current market conditions of a continuing geopolitical stand-off, it’s hard to find factors that can lead to the ruble strengthening and there can only be divergence on the rate of its future weakening,” Dmitry Polevoy, a Moscow-based chief economist for Russia and the Commonwealth of Independent States at ING Groep NV in Moscow, told Bloomberg News.

Most analysts expect the ruble to hold steady until December before declining to 35.98 in 2015 against the central bank’s target pool of dollars and euros.To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Yashu Gola at yashu@forexminute.com