CAD gains as oil soars amid new Russian sanctions

Daily Currency Update

The Canadian dollar strengthened slightly against its US counterpart this morning as the price of oil, one of Canada's main exports, climbed amid new sanctions on Russia. The United States, United Kingdom and the European Union imposed a slew of new sanctions on Russia over the weekend in a bid to put pressure on President Putin as fighting in Ukraine intensified in the last few days. Some Russian banks have been blocked from using SWIFT, a global payments system. Included in the ban was the Russian Central Bank which has built up large reserves of foreign currency over the past few years so this will make it difficult to support the ruble by selling these reserves, hence its dramatic drop in the early European trading session. In an effort to prevent further losses the Russian Central Bank has more than doubled interest rates today, taking them to 20% from 9.5%. Blocking some Russian banks from using SWIFT could cause severe disruption to Russia's oil exports. However oil pared gains after reports that the US and its allies would consider releasing about 60 million barrels of crude from emergency stockpiles to extinguish any supply fears. USDCAD was down 0.15% at 1.2680 while EURCAD was down 0.64% trading at 1.4223 at the time of writing.