Euro crawls back as markets assess the effects of sanctions and aggression

London — The euro rose on Friday after a plunge on Thursday following Russia’s invasion of Ukraine.

The dollar has fallen against most currencies as markets have receded some of the turbulent movements from the previous day.

The Russian ruble also hit a record low of 89.986 the day before, trading at around 83.5 per dollar, recovering some ground.

Chris Turner, Head of Global Markets at ING, said:

He said the size and prominence of sanctions on Russian banks, and the size of their FX deposits, may take some time to penetrate.

The United States, the European Union, and several other countries responded to Russia’s invasion of Ukraine with sanctions on banks and state-owned enterprises, as well as a wave of sanctions that hinder Russia’s ability to do business in major currencies.

Currency traders were trying to assess the impact on monetary policy around the world.

The European Central Bank (ECB) policymaker said the situation in Ukraine could delay the ECB’s departure from stimulus.

Investors now expect the ECB to raise benchmark rates by 35 basis points by the end of December. Earlier last week, they saw the ECB raise rates by 50bps by December.

Investors and some US officials, meanwhile, said the war is likely to slow down, but will not stop the approach to rate hikes.

James Malcolm, head of UBS FX strategy, said he was surprised at how much the euro sold less than the European stock market after the attack, which is now primarily considered a “European shock.”

“If this becomes more out of control, a major global risk-off event and impacts central bank pricing … The spillover effect of lower Fed pricing is the euro / Swiss franc. ) More certainly affects the dollar / yen, “he said.

The euro fell to its lowest level in Thursday’s seven years compared to the safe Swiss franc. The single currency was 1.0373, up 0.1 percent at the end of the day. It also rose 0.1% against the dollar at $ 1.1204, hitting the lowest since May 2020 at $ 1.1106 in the previous session.

The dollar index against a basket of currencies, including the euro, rose 0.1% on Friday to 96.981 after rising to its highest level since June 2020.

Bitcoin joined the recovery at $ 38,817, up 1.1%.

By Joice Alves