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Rouble up in Moscow, falls offshore in volatile, thin trading

Rouble up in Moscow, falls offshore in volatile, thin trading

On Thursday, investors were watching Russia-Ukraine peace negotiations and news of foreign currency coupon payments on Russia’s sovereign debt. The Russian rouble climbed in Moscow trading and was slightly lower abroad.

As the invasion entered its fourth week, Russia resumed shelling of Kyiv, Ukraine’s capital. Russia’s offensive has paused, according to Western sources and Ukrainian officials. Officials from both sides met again for peace negotiations in the meanwhile, but they maintained their stances remained diametrically opposed.

According to two market sources, some creditors have received payment of Russian bond coupons that were due this week in dollars. As a result, Russia may have avoided its first external bond default in a century for the time being.

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“Even if this week’s payment is made,” JPMorgan stated in a client note, “investors would need to scrutinize the next impending payments as they may be treated differently.”

Bonds with fallbacks that allow for payment in roubles have dollar coupon payments due next week and the next week. On April 4, a $2 billion bond matures.

In Moscow, the rouble gained 4.7 percent to close at 103.15 per dollar, and 3.5 percent to conclude at 113.715 per euro. Over the last four weeks, it has lost more than 20% against both currencies.

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The rouble was quoted at 96 per dollar on overseas marketplaces and traded at 104, down 3.9 percent.

As combat resumed on Thursday, international indignation over Russia’s invasion of Ukraine intensified. As a result, the West has slapped unprecedented sanctions on Russia, precipitating the country’s greatest economic crisis since the fall of the Soviet Union in 1991.

According to a client document from Citigroup, Russia has enacted harsh new requirements for foreigners seeking licenses to acquire and sell Russian assets ranging from stocks to real estate, generating new concerns about hefty write-downs for Western investors.

The US House of Representatives adopted legislation on Thursday that would strip Russia and Belarus of their “most favored nation” trade status as a result of their invasion of Ukraine, allowing for higher tariffs on their imports.

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As of March 11, Russia’s annual inflation rate had risen to 12.54 percent, the highest level since late 2015, while shortages and a steep increase in sugar prices prompted the competition authority to begin examining key sugar producers.

The central bank has ordered that the Moscow stock market remain largely closed for the remainder of the week. Moscow’s stock exchange last traded on February 25, following which the central bank imposed restrictions.

 

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