Ruble Drops as Central Bank Trims FX Tools: 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 fell for a fifth day as the central bank cut potential support to make the currency more flexible.

The ruble declined 0.5 percent to 34.7975 per dollar by 6 p.m. in Moscow, paring its appreciation since Feb. 28, a day before President Vladimir Putin’s incursion, to 3 percent. The central bank widened the corridor within which it will not intervene in the ruble and cut the amount it will sell per day to smooth out currency fluctuations. Russia has amassed 38,000 troops at its borders and continues to supply arms and personnel to rebel forces in the eastern Ukraine, the country’s National Security Council chief Andriy Parubiy said in Kiev today.

The chart shows the performance of stocks, bonds and the ruble, along with indicators of Russian investment risk. Yields on government notes due February 2027 rose three basis points to 8.75 percent, taking the increase since Feb. 28 to 39 basis points. The Micex Index declined 0.5 percent to 1,486.38, paring its advance in the period to 2.9 percent.

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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