Good morning,

Further fighting in Ukraine caused further sanctions by NATO allies over the weekend on Russian companies, individuals and the Russian Central Bank. USDRUB, a key currency pair being used as a metric to the health of the Russian rouble during the conflict, has appreciated by as much as 42.2% since Wednesday last week. During the same period, GBPRUB has also appreciated by 38.5% but both pairs have since pegged back. Yesterday morning the Bank of Russia more than doubled interest rates to 20% in an attempt to halt the slump of the rouble, with civilians lining up throughout the weekend at cash machines to withdraw funds.

On Thursday GBPUSD sank by 2% along with other safe haven currencies such as the Japanese yen and Swiss franc. In uncertain times, similar to the start of the Covid pandemic in March 2020, markets make a flight to safety and reduce riskier assets. In the currency world these are mainly currencies tied to global market commodities. After touching 1.3273, the rate has bounced back to sit above 1.3430 at the time of writing.

In the latest round of sanctions, Russian banks are to be excluded from the global SWIFT network, which is the payment messaging portal for international banks. However, talks began yesterday on the Belarusian border between Ukraine and Russia, with hopes that a resolution will be met. This has given markets some relief and the reason behind the bounce back of markets.


Have a great day.

Author: Jack Nicholls, Senior Relationship Manager.


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