Russian sanctions sees investors seek safety of US Dollar as Ruble collapses

Key Movers

As mentioned before Russia has had a slew of sanctions enacted upon it over the weekend from the UK, US and EU. Some Russian banks have been blocked from using the SWIFT messaging system which is used for most international payments. 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 earlier this morning. USD/RUB is currently trading above 100 whereas this time last week it was at 78, a massive devaluation. This is going to hit ordinary Russians hard as importing goods has immediately become much more expensive. In an effort to prevent further losses the Russian Central Bank has more than doubled interest rates today taking them from 9.5% to 20%. This is likely the reason the ruble has stabilised a little as Europe came online. Other actions enacted has been a ban from EU of any Russian planes from its airspace (including the private jets of its oligarchs). Another reason for a pause in the rubles descent is that talks have commenced between Russia and Ukraine to see if a peaceful resolution can be found. The main sticking point has been Russia's insistence on Ukraine not joining NATO which it sees as a threat to its national security. This Friday sees the latest Jobs data from the US however expect Russia/Ukraine to dictate currency moves throughout the week. EUR/USD is back under 1.12.