Free Trial

RUB Unphased by Lavrov, Blinken Sabre-Rattling as Donbas Tensions Rise

RUSSIA
  • USD/RUB has shown little vulnerability to talks between Lavrov & Blinken today, trading in line with the broader EM trend and oil side developments.
  • The currency has shown resilience to recent squabbles between officials outside of comments RE a potential Putin-Biden meeting. The likelihood of this meeting happening, along with the potential agenda, are key issues the market will be sensitive to, however.
  • Rhetoric surrounding military escalation in the Donbas between Ukraine and Russian-backed separatists has become more urgent in recent days, and a military move from Ukraine against the separatists will undoubtedly spark a Russian response – and, in turn, Western economic sanctions on Russia.
  • While NATO or the US are unlikely to militarily step in to fight Russia directly on Ukraine’s behalf, any further moves towards military escalation will likely be met with economic sanctions. The hope here is that the Putin-Biden meeting can be held before any military action kicks off in the Donbas.
  • While this Lavrov-Blinken meeting saw both sides stressing their current positions, the start of contacts and a dialogue is a step in the right direction, albeit marginal. Interestingly, the US called for a return to the Minsk format and more discussions on the matter, which will be an important precursor to any Biden-Putin contacts.
  • For now, however, we continue to muddle through with RUB unperturbed by constant verbal threats from the West. Russia’s 5Y CDS continues to edge lower, but still remains elevated on the prospect of potential sanctions.
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.