The Russian rouble recouped most of its losses in early trade on Tuesday after its crash to an all-time low in the previous session.
A fraction of calm returned to currency markets after officials from Russia and Ukraine held an initial round of ceasefire talks four days after Russia invaded its neighbour.
Investors rediscovered their appetite for risky bets even as they watched the conflict in Ukraine unfold and weighed its economic implications, notably regarding energy prices.
Global share markets have been whiplashed in recent days tracking Russia’s invasion of Ukraine and the US and its allies’ ramping up of sanctions, including limiting Moscow’s ability to deploy its foreign currency reserves.
Last night, high-level talks between Kyiv and Moscow ended with no agreement except to keep talking, but stock markets stabilised on signs of no immediate escalation of sanctions.
Russia’s rouble fell nearly 30% to a record low of 120 per dollar earlier on Tuesday, after sanctions were slapped on Russia. But the following action by Russia’s central bank to hike interest rates and exert capital controls, the Russian currency has recouped most of those losses against the dollar. It was last trading at around 92 per dollar.
The volatility in forex markets was highest in 14 months on Monday, as measured by a Deutsche Bank index, but currency markets were pretty quiet on Tuesday.
“News from Ukraine remains bleak, with Russia-Ukraine talks yielding no resolution,” Rodrigo Catril, a senior foreign-exchange strategist at National Australia Bank, told Reuters.
“Fighting rages on as the West looks to increase efforts to isolate Russia.”