Russian Ruble Declines on Sanction Fears, Aussie Nervously Steady

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Russian Ruble Declines on Sanction Fears, Aussie Nervously SteadyThe Russian ruble reversed its earlier gains that saw it touch a 20-month high last week as investors speculated that Russia may be slapped with further sanctions if it gives its backing to a referendum held in Eastern Ukraine over the weekend.

The ruble tumbled 0.1 percent to 41.1685 versus the central bank’s target basket of currencies (dollar-euro) as of 11:12 a.m. Moscow time, after earlier surging 2.3 percent in the five days ended May 11.

The ruble has declined 0.4 percent to 35.1760 against the dollar and edged up 0.1 percent to 48.4705 per euro. The currency has plunged 6.6 percent against the dollar in 2014, making it the second-worst performer out of the 24 emerging-economy currencies monitored by Bloomberg. Yields on debt denominated in rubles that matures in February 2027 fell one basis point to 9.09 percent, their weakest in three weeks.

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Ninety percent of those who voted in a referendum in Donetsk, which was labelled by Kiev and the West as a sham, were in favor of a separation from Ukraine. The market awaits Moscow’s response to the results of the referendum, which will be revealed by Russian President Vladimir Putin.

“An active support of the referendum results by Russia will mean new sanctions,” wrote OAO Promsvyazbank analysts Alexei Egorov and Dmitriy Gritskevich.

The Australian dollar held steady against the U.S. dollar at around 93 U.S. cents just before the government releases its budget data on Tuesday. China is expected to release its industrial output data, while U.S. is expected to announce its retail sales data. The Aussie was trading at 93.61 cents at noon local time in Sydney on Monday, up from Friday’s 93.56 cents. 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