The ruble fell halted its strongest winning streak in five months on Wednesday as violence in Ukraine continued unabated while European Union considered further sanctions against Russia.
The currency dropped 0.3 percent to 36.9650 per dollar as of 12:01 pm Moscow time after earlier rising 1.6 percent yesterday. Yield on the 10-year ruble bonds rose three basis points, or 0.03 percentage point, to 9.55 percent.
The ruble had advanced yesterday after Russia and Ukraine revealed plans for a cease-fire in the former Soviet state. EU officials reviewed further economic sanctions targeted at Russia, which may be disclosed by Friday.
“Yesterday’s jump was based on some excessive optimism,” Vladimir Miklashevsky, a Helsinki-based strategist at Danske Bank A/S in Helsinki, told Bloomberg News. “Now the people are taking profits, as few people yet believe in a trend towards a permanent peace solution.”
Meanwhile, the volatility of the India’s rupee touched its lowest level in one month after various reports showed that the nation’s economy is improving and on news about Ukraine and Russia cease-fire.
The rupee’s three-month implied volatility, which measures the projected shifts in the exchange rate used to set prices to options, fell eight basis points, or 0.08 percentage point, to 6.77 percent. This was the weakest level since July 31. The currency advanced 0.2 percent to 60.3650 per dollar.
Analysts closely watched the European Central Bank, which they expected to roll out quantitative easing policy in its meeting held today. The decision is expected to boost investment in emerging markets.
An official report released on Aug. 29 showed that India’s gross domestic product rose 5.7 percent in the second quarter, the fastest pace since the first three months of 2012. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Jonathan Millet at firstname.lastname@example.org