Russia’s rouble plunged to a record low on Thursday before recovering slightly as investors digested afresh wave of Western sanctions against Russia after it launched a full-blown invasion of Ukraine.
US President Joe Biden unveiled harsh new measures that would limit Russian access to the US financial system while hammering its access to global exports of everything from commercial electronics to semiconductors and aircraft parts.
The Russian currency shed 4.5% to 85.06 against the dollar as of 2046 GMT, although bounced off its all-time low of 89.98 per dollar hit earlier in the session as the central bank announced FX interventions.
Global stock markets recouped some losses following Biden’s announcement, while Russia’s stock index clawed back some losses in additional trading session.
It was last down 24.3%.
The rouble-denominated MOEX stock index plummeted 33.3% at the close of Moscow trading, while the dollar-denominated RTS tumbled 39.4%, both recording their biggest one-day percentage decline on record.
Yields on the Russian 10-year benchmark OFZ Treasury bonds closed at 12.66%, the highest since March 2015.
“Russian assets are expected to fall more sharply going ahead and we see the rouble fall past the 90 to 95 level against the dollar if there are more aggressive sanctions from the West,” said Liam Peach, an economist at Capital Economics.
“It all depends on how aggressive the West wants to be.”
European Union leaders said earlier they would slap harsh new sanctions which will include freezing Russian assets in the 27-nation bloc, halting banks’ access to European financial markets and hitting “Kremlin interests”.
With investors worldwide fleeing risk assets, the MSCI’s gauge for emerging market stocks slumped 4.3%, marking its worst day since March 2020.
Most other emerging market currencies also dropped, with the Turkish lira and the South African rand falling 1.4% and 2% respectively.
Latin American currencies, which have mostly fared well on the back of surging commodity prices recently, also felt the heat from geopolitical turmoil.
Brazil’s real and Mexico’s peso dropped nearly 2% against the dollar.
MSCI’s index of Latin American stocks dropped 2%, its worst single day fall in a month.