The Russian rouble slumped to a low of $132.5 against the dollar on Thursday as financial markets contemplate whether major producers would boost supply to plug the output gap from Russia due to sanctions for its invasion of Ukraine.
According to Reuters, while the currency recouped from those lows, it was still down over 7 per cent for the day, trading a touch above $120.
A rally for global shares wilted on Thursday as analysts warned of further pain for stocks with no immediate end in sight to the war in Ukraine, even after planned diplomatic talks between Moscow and Kyiv had lent momentum to riskier bets.
“The prospect of peace, an imminent de-escalation, really is pie in the sky,” Michael Hewson, chief markets analyst at CMC Markets, told Reuters.
“As with any sort of bear market, you always get face-ripping rallies in them because people are reluctant to be aggressively pessimistic,” he added.
To add to investors’ worries, the Kremlin accused the US on Wednesday of declaring an economic war on Russia that was sowing mayhem through energy markets and put Washington on notice it was considering its response to a ban on Russian oil and energy.
Russia’s financial markets have been thrown into turmoil by sanctions imposed over its invasion of Ukraine, the most significant attack on a European state since World War Two. The stock market remains closed, and trading volume on its sovereign debt has vanished.
Financial markets rebounded on Wednesday after bordering on the disorderly in recent days, but the rally remains susceptible to reversal.
Wall Street stocks gained in the previous session. The S&P 500 posted its biggest one-day percentage gain since June 2020, and the Nasdaq was tallying its most significant rise since March 2021 as oil prices posted their deepest plunge since the early pandemic days nearly two years ago.
While oil remained jittery as the market weighs OPEC filling Russia’s supply gap, uncertainty over where and when supply will come from to replace crude from the world’s second-largest exporter Russia in a tight market has led to wide-ranging forecasts for oil prices between $100 and $200 a barrel.