By Alun John
HONG KONG (Reuters) – The dollar retreated against most currencies, including the euro, on Friday, as markets walked back some of the tumultuous moves from the previous day when Russia’s invasion of Ukraine sent investors scrambling.
Russia’s rouble also recovered some ground, trading at around 84.4 per dollar on Friday, having hit a record low of 89.986 per dollar the day before as Russia unleashed the biggest attack on a European state since World War Two.
The United States, the European Union and some other countries responded with a wave of sanctions impeding Russia’s ability to do business in major currencies along with sanctions against banks and state-owned enterprises.
Fighting continued on Friday as Russian troops advanced towards Kyiv, though markets were calmer than 24 hours previously, with stock markets rising in Asia, following gains on Wall Street overnight. [MKTS/GLOB]
The euro was last at $1.1218, up 0.24%, having touched as low as $1.1106 on Thursday, its lowest since May 2020.
Other currencies also recovered their previous day’s losses and the dollar index was at 96.854, 0.2% lower. The scale of earlier moves means it still up 0.8% on the week, however.
“The first order impact (of the conflict) is naturally in Russia and Ukraine … but there is an impact on Asia Pacific bond and foreign exchange markets as well,” said Riad Chowdhury, APAC head of MarketAxess, a fixed income trading platform.
Chowdhury pointed to a “flight-to-quality type move both in global assets (moving to the dollar and yen) as well as in emerging markets”.
Also part of Friday’s recovery was sterling, which firmed 0.4% to $1.343, the Australian dollar, which was 0.46% higher at $0.7195, and the yen, which rose to 115.23 per dollar.
As well as the direct impact of the war in Ukraine, currency traders were trying to assess the war’s impact on monetary policy around the world.
Several policymakers at the European Central Bank (ECB), even those sometimes seen as hawkish, said the situation in Ukraine could cause the ECB to slow its exit from stimulus measures.
Meanwhile, investors and some U.S. officials said the war would likely slow but not stop approaching interest rate hikes.
Federal Reserve policymakers have been publicly sparring over whether to begin with a 25 or 50 basis point rate hike at its March meeting.
“We expect the consequences (of the conflict) to translate into a somewhat less hawkish stance from major central banks – tilting the Fed towards a 25 basis hike in March and keeping the ECB on the fence,” said Invesco strategists in emailed comments.
(Reporting by Alun John; Editing by Christopher Cushing and Kim Coghill)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Leave a Reply