Rouble leaps after Russia says some troops are returning to bases By Reuters

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© Reuters. FILE PHOTO: Service members participate in navy workouts held by the armed forces of Russia and Belarus on the Gozhsky coaching floor within the Grodno area, Belarus, February 12, 2022. Leonid Scheglov/BelTA/Handout by way of REUTERS

By Andrey Ostroukh and Alexander Marrow

MOSCOW (Reuters) – The rouble rose greater than 2% versus the greenback on Tuesday as Russia mentioned some troops close to Ukraine had been returning to their bases after navy workouts, easing issues over a possible invasion that had fuelled a Russian asset sell-off final week.

Following days of U.S. and British warnings that Moscow may invade its neighbour at any time, Russia’s assertion that it was withdrawing some forces from close to the border helped the foreign money, shares and bonds rebound.

Russia has repeatedly denied it plans to invade Ukraine. NATO mentioned it had but to see any signal of de-escalation on the bottom.

By 1252 GMT, the rouble was 2.1% stronger in opposition to the greenback at 75.15, near recouping all losses sustained within the foreign money’s sharpest single-session drop in practically two years on Friday.

The rouble strengthened 1.7% in opposition to the euro to 85.28.

“Market sentiment stays extremely fragile, so volatility is certain to remain excessive,” Sberbank CIB mentioned in a word.

On Monday, the foreign money climbed after Russian Overseas Minister Sergei Lavrov urged to President Vladimir Putin that Moscow ought to proceed alongside the diplomatic path in its efforts to extract safety ensures from the West.

Dmitry Polevoy, head of funding at Locko Make investments, mentioned the foreign money’s response to these phrases confirmed {that a} single phrase might be adequate to maneuver the rouble strongly in both path.

“We nonetheless imagine the rouble is prone to rise from these ranges,” he mentioned, including that the rouble has lagged different rising market currencies by 5% to 7% this 12 months.

One improvement that will complicate the foreign money’s progress trajectory was parliament voting to enchantment to Putin to recognise two Russian-backed breakaway areas in jap Ukraine as impartial.

Recognition of the 2 areas might unravel the present Minsk peace course of for east Ukraine to which Russia has mentioned it’s dedicated.

“The shuttle diplomacy continues – so long as the West stays vocal on the difficulty, the market will proceed to observe headlines, with the binary consequence (an additional deterioration vs conciliation) suggesting important up/draw back,” BCS International Markets mentioned.

Yields on Russia’s 10-year benchmark OFZ bonds eased to 9.81% after spiking above 10% for the primary time since February 2016 on Monday. Yields transfer inversely to costs.

Russian inventory indexes had been up, recovering after a sell-off within the earlier two periods.

The dollar-denominated RTS index rose 5.6% to 1,505.1. The rouble-based MOEX Russian index was up 3.1% at 3,590.9.

Shares in web big Yandex (NASDAQ:) rose 7.5%, outperforming the broader market after the corporate reported full-year outcomes and mentioned it’s eyeing $6.5 billion in revenues in 2022.

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