Stan Chart Look At FX Performance During Times Of Heightened Russia Worry

Standard Chartered Note that “during three recent periods of intensifying Russia-Ukraine tensions, we identify the most consistently weak and strong currencies. The periods are recent episodes of simultaneous RUB and UAH weakness. Not much beats the USD in G10 in terms of safe-haven performance, but the JPY, GBP, and CHF have suffered only modest losses over the three episodes. Despite aggressive rhetoric from the UK on the consequences of Russian actions, market participants seem to be treating the GBP largely as a bystander. EUR/CHF has dropped in each episode, sometimes by small amounts.”

• “The weakest performers are the Nordics - the NOK and especially the SEK, which has been the weakest or next-to-weakest performer in each episode. The NOK may be buffered somewhat by the higher oil prices that accompany tensions, but the steep run-up in oil has not been enough to make it a strong performer.”
• “EUR/CHF has dropped in each episode, but sometimes by very modest amounts. The AUD and NZD were very weak performers in the first two rounds of crisis escalation but have done much better in the third round. It could be that investors see the benefits to commodity prices from increased tensions as outweighing the risk-off, but not for near neighbours of Russia, such as Norway and Sweden.”