Russian ruble soars as US banking intervention hurts dollar

The Russian ruble shrugged off slumping oil prices to rise sharply against the dollar on Monday as US authorities launched emergency measures to shore up confidence in the banking system after a bank failure.

The US dollar fell as authorities stepped in to cap the fallout from the sudden collapse of Silicon Valley Bank, with investors hoping the Federal Reserve will take a less aggressive monetary path.

By 1427 GMT, the ruble was 1.4 percent stronger against the dollar at 75.53, hitting a near two-week high.

It had gained 0.8 to trade at 80.34 versus the euro and had firmed 0.5 percent against the yuan to 10.91 .

“The dollar is weakening on rising expectations that problems in the US banking system may halt the Federal Reserve’s tightening cycle,” said Andrei Kochetkov of Otkritie.

The ruble was at its strongest against the dollar in almost a week. A drop in oil prices late last week and data detailing Russia’s shrinking current account surplus had put pressure on the currency.

“The key event of the week is Friday’s central bank rate decision, where we do not expect (the rate) to change, with the hawkish rhetoric to remain,” said Dmitry Polevoy, head of investment at Locko-Invest.

Analysts polled by Reuters widely expect the bank to hold its key interest rate at 7.5 percent before possibly hiking the cost of borrowing later this year.

Brent crude oil, a global benchmark for Russia’s main export, was down 2.4 percent at $80.8 a barrel, earlier clipping a more than two-month low.

Russian stock indexes were mixed.

The dollar-denominated RTS index was up 0.5 percent to 947.7 points. The ruble-based MOEX Russian index was 0.8 percent higher at 2,258.4 points.