With fierce fighting under way in Kyiv and other large Ukrainian cities, and grim reports of civilian casualties, the war in Ukraine shows no signs of abating.
Financial markets responded in predictable fashion to wider western sanctions against Russia. The rouble crashed to a new record low of 120 per dollar in offshore trading and was down 18% to 98.21 per dollar in Moscow trading, after earlier losses of close to 30%.
European stock indices have lost more than 2% while the UK’s FTSE 100 index has dropped 105 points, or 1.4%, to 7,383. Wall Street has also opened lower.
The Central Bank of Russia more than doubled its key interest rate to 20% and announced a slew of measures to prop up the rouble and the Russian economy, including ordering domestic exporting companies to sell 80% of their foreign exchange revenues. It refused to open the Moscow stock exchange on Monday, after initially delaying trading until 3pm Mosocow time.
Governor Elvira Nabiullina said the central bank had sold $1bn of its foreign currency reserves to shore up the rouble last Thursday and a smaller amount on Friday, but did not intervene in currency markets today to preserve its reserves.
Crude oil, gas and other commodities prices have surged. Bent crude is still trading above $100 a barrel, up 2.6%, after giving some of its earlier gains, while US light crude is 3.5% higher at $94.84. Aluminium set a new record and wheat, corn and soybean futures rose in Chicago. Palladium, used in car catalytic converters, rose 5% amid supply fears. Russia’s Nornickel is the world’s largest supplier of the precious metal.
Spot gold, a safe-haven investment, is up 1.3% at $1,913 while the dollar has also benefited from a flight to safety. Gold has increased about 6.5% in February, touching an 18-month high of $1,7973.96 last week. Spot silver rose 1.3% to $24.50.
The benchmark British natural gas price rose 14% to 255.50p while the Dutch gas futures April contract added 12% to €104.38 per megawatt hour.
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