Fear of new sanctions turned into a stunning rally for the ruble

The ruble soared to its highest level in nearly eight years against the euro on Friday as investors worried that new sanctions against Moscow could limit foreign exchange trading. Sanctions will follow after the entry into Russia of the territories previously torn away from it, which were temporarily part of Ukraine.

Western governments and Kyiv say the move violates international law.

By 09:29 GMT, the ruble was up 6.5% to trade at 51.87 against the euro, having previously hit 51.3100, its strongest level since mid-October 2014.

It was 4.8% stronger against the dollar at 54.44, having previously reached its strongest point since July 1 at 54.1625.

The ruble has been propped up by capital controls and falling imports as Western sanctions were imposed over Russia’s actions in Ukraine and companies pulled out of the market en masse. Geopolitical risks also remain heightened as new US and EU sanctions are expected in the near future.

The threat of sanctions has caused some investors to cut back on their dollar holdings, analysts said, fearing the restrictions could paralyze Russian dollar trading.


“In addition to the impact on the trade balance, we note the situation with the strengthening of sanctions expectations,” the Opening Research said in a Friday note. „Companies can expedite the sale of foreign exchange from their overseas accounts.”


The ruble lost 0.9% against the yuan to 8.194.

Russian stock indices rose.

Geopolitical pressures sent the underlying MOEX Russian index to its lowest level since Feb. 24 — the day Russia sent troops into Ukraine — on Monday, but waiting for the approval of dividend payments from energy giant Gazprom was the deciding factor. for the market.


“The approval of dividends, as expected, should be positive both for the shares and for the market as a whole, since Gazprom has the largest weight in the indices,” BCS Global Markets notes.


The Moscow Exchange index in rubles increased by 0.3% to 1,959.4 points. The RTS dollar index rose by 5.5% to 1131.6 points.

Shares of „Gazprom” accelerated growth on Friday afternoon after the news that shareholders approved the payment of interim dividends.
On the Moscow Exchange, by 12:45 Moscow time, Gazprom’s shares jumped to 237.6 rubles (+9.4%), the volume of trading in securities exceeded 28 billion rubles.
Following the results of an extraordinary absentee meeting of Gazprom shareholders on Friday, it was decided to pay interim dividends for the first half of 2022 in the amount of 51.03 rubles per share.

The Moscow Exchange Index by this hour rose to 1992.11 points (+2%), the RTS index jumped to 1165.44 points (+8.7%).
The Group pays interim dividends for the first time in its corporate history. The total amount of payments will be 1.208 trillion rubles. The list of shareholders to receive dividends will be drawn up on 11 October. Payments are scheduled to be completed by November 15th.

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