The risk of the ruble (RUB)

The war in Ukraine has dominated the news for the past two weeks. A battle that is raging at Europe's borders and has been criticized by several Western nations. Because every action has a repercussion, the ruble's risk might rise even if it is half as high as it was during the 1998 ruble crisis.

The rebound in ruble risk against the US dollar

Because of its invasion of Ukrainian territory , several sanctions are imposed on Russia and these affect the country's currency, the ruble (RUB). One of the direct consequences of this war is the increased risk of the rouble. 

Indeed, the risk associated with the ruble is increasing, but it remains below the rate observed during previous monetary crises. It should be noted, however, that the risk of the ruble jumped when the Russian currency reached an all-time high against the US dollar. 

But compared to the ruble crisis of 1998, the risk this time around is less than half the levels seen that year. This information published on March 9 comes from the financial intelligence analysis platform Qontigo.

Two weeks into the war, signals indicate that the rise in currency risk has not yet been fully reflected in the risk model. According to some opinions, gold will likely continue to trade above $2,000 in the coming months. 

The Qontingo platform tells us that currency risk can also increase. The platform reads: “However, we are only two weeks away from the start of the armed conflict and the increased currency risk may not yet be fully reflected in the risk model, but the currency risk is likely to increase in the near future” .

The behavior of the market seems very undulating in recent days. In the markets of emerging countries, the Turkish lira remained the riskiest currency. However, the risk of the ruble and Ukrainian currencies (UAH) seems relatively moderate compared to the high levels of currency risk seen in previous crises.

Russia predicted risk at highest level in 25 years

The consequences of sanctions against the Russian economy following its invasion of Ukraine have increased Russia 's risk . This has reached its highest level in 25 years. On March 2, Russia's short-term risk exceeded levels seen during the global financial crisis. 

It should be noted, however, that it was still below the peak reached during the ruble crisis in 1998. Several factors help explain the maintenance of a low level of volatility. We can notably note the absence of exchange of Russian shares on its stock market. It should also be noted that the increased risk of the ruble very often stands out from other emerging markets.

Experts say Western sanctions against Russia could shrink its economy by 5% this year. This contraction will be particularly due to the expulsion of the country from the SWIFT network. Which will certainly cripple the assets of the central bank of Russia. Even with the increased risk of the ruble, it is clear that Russia has prepared for several eventualities. It prepared for this war by taking measures to limit the impact on its economy.

Source: Finbold