Ruble Jumps on ECB as G-7 Seeks Diplomacy: Russia Reality Check

As markets react in real time to Russia’s incursion into Crimea and the annexation of the Black Sea peninsula, the ruble climbed the most in a month as the Group of Seven spared Russia further sanctions and the European Central Bank cut interest rates.

The currency rose 0.8 percent to 34.7190 per dollar, taking its appreciation since Russian President Vladimir Putin’s intervention in Ukraine started on March 1 to 3.4 percent. The U.S. and its allies embarked on two days of contacts with Russian leaders in a bid to resolve the crisis in Ukraine. The ruble led advances in developing Europe after the ECB became the first major central bank to take one of its main rates negative.

The chart shows the performance of stocks, bonds and the ruble, along with indicators of Russian investment risk. The Micex Index lost 0.3 percent to 1,470.70, paring its drop to 1.8 percent since Feb. 28. The yield on local-currency bonds due February 2027 fell 10 basis points to 8.57 percent, trimming the increase in the period to 21 basis points.

The top panel displays the value of the Micex Index of 50 Russian equities, government debt in the Bloomberg Russia Local Sovereign Bond Index, and the ruble relative to the dollar. Credit default swap rates on Russian bonds due in five years appear in the bottom panel. The yield gap between Russian debt and U.S. Treasuries and the one-month implied volatility of the ruble are also tracked.

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