The Federation Council of Russia at the request of Vladimir Putin renounced the right to use the armed forces on the territory of Ukraine. The news affected the Russian stock indices as well the ruble’s exchange rate. According to the statistics, the RTS Index jumped to the level of 1400.62 points, thus posting a 2.3% increase compared with the opening price. The MICEX Index gained 1.27% and was trading around 1508.18. The Russian ruble strengthened its positions versus the greenback and European single currency. The USD/RUB pair lost 36 kopecks falling to 33.75 rubles, while EUR/RUB slid 42 kopecks to 45.99 rubles.
“The market has been growing for three months in succession since the March slump. The latest news was rather unexpected. But I think nobody believed that Russia’s troops will be sent to Ukraine in the end,” Alexei Bachurin, the head of Russian Equity Trading at Renaissance Capital, stated.
Other experts share the same opinion. It is said that gaining momentum, the market set off its reaction to the possible troops’ deployment and managed to return to the levels scored early this year. “The situation in eastern Ukraine has been worsening for several months, but the market was paying no attention to it. The thing is that market participants did not expect Russia to deploy its troops in Ukraine. So, now when the resolution is revoked, the market is as good as it gets,” Vadim Bit Avragim, a portfolio manager at Moscow-based Kapital Asset Management, noted. As for the U.S. dollar, analysts point out that it is losing ground against other currencies too. “The ruble is getting strong since there are prospects for peace settlement of Ukraine’s crisis now. Besides, the ruble is supported by the fact that the greenback is declining versus the commodity currencies. For example, since the middle of March, the loonie and Aussie have strengthened against the greenback by 5%,” VTB24 bank’s statement reads.
