Russian Rouble Faces Turbulence Amid Geopolitical Tensions

The Russian rouble neared 100 to the U.S. dollar following reports on potential U.S. military support for Ukraine. Geopolitical tensions have led to increased volatility in the currency market. Meanwhile, sanctions have shifted trade in major currencies to the OTC market, affecting rouble's exchange rate stability.

The Russian rouble hovered around 100 per U.S. dollar on Monday as reports emerged of potential U.S. military support for Ukraine. By 0830 GMT, it stood at 99.90 against the dollar and 105.48 to the euro according to LSEG data, while slipping 0.6% against the yuan on the Moscow stock exchange.

"Renewed geopolitical uncertainty may heighten currency market volatility," commented BCS brokerage analysts. The rouble and the Russian stock market saw gains last Friday in what analysts dubbed a "Scholz rally," following German Chancellor Olaf Scholz's first call with Russian President Vladimir Putin in nearly two years.

A reversal of these gains seems likely due to reports about U.S. missile decisions. Geopolitical tensions pushed Brent crude oil, a cornerstone of Russia's export, up 0.6% to $71.40 a barrel after intensified Russian-Ukrainian conflict over the weekend. Sanctions on the Moscow Exchange have forced a shift in dollar and euro trades to the OTC market, muddying price data and affecting the rouble's exchange rate. One-day rouble-dollar futures rose 0.6% to 100.04.

(With inputs from agencies.)