# Euro weakens, rouble slumps as sanctions piled on Russia
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-02-28
Category: TRADING
Category URL: https://financedigest.com/category/trading
Meta Title: Russian rouble plunges as Euro takes a hit amid Ukraine
Meta Description: Get the latest updates on the impact of Western sanctions on Russia and how it's affecting global currencies. Stay informed with Reuters.
URL: https://financedigest.com/euro-weakens-rouble-slumps-as-sanctions-piled-on-russiahtml

![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-02-28t024715z2lynxmpei1q0gvrtroptp4russia-markets-1736816142837-compressed.jpg)

By Saqib Iqbal Ahmed

NEW YORK (Reuters) -The Russian rouble plunged and the euro nursed losses against the U.S. dollar on Monday as the [West ramped up sanctions against Russia over its Ukraine](https://www.financedigest.com/putin-says-peace-talks-with-ukraine-are-at-dead-end-goads-the-west.html "Putin says peace talks with Ukraine are at dead end, goads the West") invasion, prompting investors to shun riskier currencies.

Western allies have ramped up efforts to punish Russia with new sanctions including cutting off some of its [banks from the SWIFT financial network and limiting Moscow’s ability to deploy its $630 billion](https://www.financedigest.com/first-abu-dhabi-bank-could-renew-35-billion-offer-for-stanchart-bloomberg-news.html "First Abu Dhabi Bank could renew billion offer for StanChart -Bloomberg News") foreign reserves and shuttering their airspace to Russian aircraft. [Companies also reported](https://www.financedigest.com/global-body-urges-eu-to-make-company-life-simpler-by-aligning-climate-reporting.html "Global body urges EU to make company life simpler by aligning climate reporting") divestment plans.

After plunging 30% to a record [low of 120 per dollar](https://www.financedigest.com/euro-rises-after-spanish-cpi-dollar-slips-towards-8-mth-low.html "Euro rises after Spanish CPI, dollar slips towards 8-mth low"), the rouble recovered some ground, to trade down about 24% on the day at 111 per dollar, as an emergency rate hike and other urgent measures adopted by the Russian central bank helped it trim losses.

Still, [outside of the rouble the FX market](https://www.financedigest.com/outside-door-handle-market-analysis-trends-top-manufacturers-share-growth-statistics-opportunities-and-forecast-to-2027.html "Outside Door Handle Market Analysis, Trends, Top Manufacturers, Share, Growth, Statistics, Opportunities and Forecast to 2027") reaction has been relatively stable, market participants said.

There is clearly [weakness in east European](https://www.financedigest.com/european-shares-edge-higher-on-healthcare-lift-weak-china-data-stokes-worries.html "European shares edge higher on healthcare lift, weak China data stokes worries") currencies even outside of the rouble… but at the same time they are not really [weakening to new record](https://www.financedigest.com/ikea-reports-record-sales-as-price-hikes-offset-weakening-consumer-confidence.html "IKEA reports record sales as price hikes offset weakening consumer confidence") lows or anything like that,” said Brad Bechtel, global head of FX at Jefferies, in New York.

“It’s a very subdued reaction,” he said.

Officials from Russia and Ukraine ended peace talks on Monday and will return to their respective capitals for further consultations before a [second round](https://www.financedigest.com/meta-to-cut-10000-jobs-in-second-round-of-layoffs.html "Meta to cut 10,000 jobs in second round of layoffs") of negotiations, RIA news agency quoted Ukrainian presidential adviser Mykhailo Podolyak as saying.

News of the talks helped soothe some nerves and the euro pared losses to trade down 0.49% on the day at $1.1212, after earlier [falling more than 1% to a four-day low](https://www.financedigest.com/dollar-falls-to-nine-month-low-as-powell-notes-progress-in-disinflation.html "Dollar falls to nine-month low as Powell notes progress in disinflation") of $1.1121.

The initial knee-jerk reaction is fading from the real extreme flight to safety that we saw at the open yesterday,” said Karl Schamotta, [chief market](https://www.financedigest.com/future-market-insights-appoints-aditi-basu-as-chief-marketing-officer.html "Future Market Insights Appoints Aditi Basu as Chief Marketing Officer") strategist at Corpay.

Still, traders [remained very skeptical of holding euro](https://www.financedigest.com/euro-zone-credit-growth-remains-brisk-despite-gloomy-outlook.html "Euro zone credit growth remains brisk despite gloomy outlook") positions, Schamotta said.

One-month implied volatility on the euro, a measure of how much [traders expect the currency to move against the dollar](https://www.financedigest.com/dollar-stands-firm-while-traders-await-cpi.html "Dollar stands firm while traders await CPI") over the near term, hit a 16-month high on Monday.

General aversion to [risk kept the Japanese yen and the Swiss franc](https://www.financedigest.com/france-seeks-strategy-as-nuclear-waste-site-risks-saturation-point.html "France seeks strategy as nuclear waste site risks saturation point") well supported. With the greenback down 0.53% against the yen and 0.95% lower against the franc.

While a jump in the [price of oil](https://www.financedigest.com/oil-prices-steady-after-u-s-stockpile-swell.html "Oil prices steady after U.S. stockpile swell"), one of Canada’s main exports, helped support the Canadian currency, investors’ hesitancy to take on risk kept a lid on the loonie. The Canadian dollar was up about 0.1% at 78.75 U.S. cents.

Besides geopolitical tensions, investors also remain focused on key [economic data](https://www.financedigest.com/oil-slumps-on-economic-data-stronger-u-s-dollar.html "Oil slumps on economic data, stronger U.S. dollar") releases expected later this week, including U.S. [nonfarm payrolls](https://www.financedigest.com/dollar-tumbles-as-u-s-nonfarm-payrolls-show-mixed-picture.html "Dollar tumbles as U.S. nonfarm payrolls show mixed picture") due Friday, that could help shape the U.S. Federal Reserve’s thinking as it gears up to [raise interest](https://www.financedigest.com/delivery-hero-ramps-up-interest-payments-to-raise-1-billion-euro-convertible-bond.html "Delivery Hero ramps up interest payments to raise 1 billion euro convertible bond") rates.

[Markets are now pricing](https://www.financedigest.com/markets-pricing-some-geopolitics-but-risk-premia-can-grow-further-goldman.html "Markets pricing some geopolitics, but risk premia can grow further -Goldman") in a 93% chance the U.S. Federal Reserve will [hike interest rates](https://www.financedigest.com/uk-stocks-slip-as-rate-hike-worries-grip-investors.html "UK stocks slip as rate hike worries grip investors") by 25 basis points at its March meeting, according to CME’s Fedwatch tool.

(Reporting by Saqib Iqbal Ahmed; editing by Jonathan Oatis and Toby Chopra)


---
This blog is powered by Superblog. Visit https://superblog.ai to know more.
---