Russian assets jump on reports Moscow-Ukraine tensions de-escalate

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  • Rouble up as Moscow to return troops to bases: IFX
  • Rand gains as gold hits 8-month high
  • Ethiopia parliament lifts state of emergency early
  • Turkey budget surplus at 30 bln lira in Jan

Feb 15 (Reuters) - Russia's rouble extended gains for a second straight session on Tuesday, while stocks in the region jumped on reports that some Russian troops near Ukraine are returning to bases, in signs of a de-escalation in tensions between the two countries.

The rouble gained 1.8% against the dollar after Russia's Interfax news agency cited the defence ministry as saying that while large-scale drills across the country continued, some units of the Southern and Western military districts have completed their exercises and started returning to bases. read more

The MSCI's index for emerging market stocks (.MSCIEF) rose 0.4%.

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"The market is happy about what it is seeing and it may continue like that as we get more news about the troops that have returned to their own bases. The further they are, the stronger the market reaction will be," said Cristian Maggio, head of strategy at TD Securities.

"This is either going to escalate over the next few days or it will probably de-escalate until the end of the year when the cold season hits. I don't think there's an opportunity for the market to be hanging with uncertainty for very long."

Markets across the globe have been roiled by fears of an imminent attack on Ukraine by Russia, but some of the stress subsided after Russian Foreign Minister Sergei Lavrov on Monday suggested to President Vladimir Putin that Moscow should continue along the diplomatic path. read more

Analysts also point to high interest rates by the Russian central bank, rising oil prices and a pause in foreign currency purchases making the rouble even more attractive as a carry trade, where traders borrow low-yielding currencies, such as the U.S. dollar, and convert them into roubles to buy high-yielding bonds.

The rouble-based MOEX index (.IMOEX) jumped 3.3%, while the dollar denominated RTS share index (.IRTS) shot up 5.4%.

Ukraine's Hryvnia added 0.9% against the dollar, while its government dollar-denominated bonds also rose about 6%.

The South African rand gained 0.5%, tracking a jump in gold prices, which hit an eight-month high amid Russia-Ukraine tensions boosting the appeal for safe-haven assets. The currency is eyeing a second straight day of gains.

Turkey's lira struggled for direction, after the country's central government budget showed a surplus of 30.04 billion lira ($2.2 billion) in January, with a primary surplus of 44.3 billion lira.

The Ethiopian parliament voted for an early end to a six-month state of emergency declared in November, when rebellious Tigrayan forces had threatened to march on the capital. The country's dollar-denominated bonds edged lower. read more

For GRAPHIC on emerging market FX performance in 2021, see http://tmsnrt.rs/2egbfVh

For GRAPHIC on MSCI emerging index performance in 2021, see https://tmsnrt.rs/2OusNdX

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Reporting by Shreyashi Sanyal and Anisha Sircar in Bengaluru; Editing by Rashmi Aich

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