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Russian Sanctions-Proofing Puts RUB On the Front Foot, But Ukraine Risks Remain

  • USD/RUB opens firmly lower as markets digest the impact of US sanctions in yesterday's session, erasing the initial spike higher to move back below 75.50.
  • Beyond the knee-jerk reaction of the sanctions, markets are seeing that, given a highly undervalued RUB, reduced foreign ownership of $-debt <50%, limited foreign OFZ holdings <20% and substantial FX reserves, there are a number of hurdles in place to cushion against any major adverse financial sanctions effects as we highlighted yesterday.
  • Additionally, due to narrow scope, a number of avenues remain open to circumvent OFZ restrictions.
  • The US did, however, voice flexibility to escalate sanctions, but overnight Biden's comments urging de-escalation and dialogue going forward will have soothed concerns somewhat.
  • We can likely expect some choppy price action today into the weekend as headline ping-pong resumes and the Ukraine conflict shows little sign of thawing just yet.
  • Markets may be looking to tentatively fade any moves back towards 76.50-77.00, but with lingering uncertainty over Ukraine tensions and possible EU & UK sanctions, many will likely watch from the side-lines until the prevailing volatility recedes somewhat.
  • Oil markets providing little support to RUB, trading marginally in the green.
  • Intraday Sup1: 75.3055, Sup2: 74.9221, Res1: 75.7372, Res2: 76.0201, Res3: 76.3321
MNI London Bureau | +44 020-3983-7894 |
MNI London Bureau | +44 020-3983-7894 |

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