Bond prices, however, grew slightly as inflation statistics supported predictions for another rate decrease. The Russian rouble was trading at 60.77 versus the greenback and was trading at 61.78 against the euro with a slight change of 0.2%.
The rouble was supported by capital controls and ended 2021 as the currency with the strongest performance. It is anticipated that tax payments due by the end of the month, which typically encourage exporters to exchange some of their gains for foreign currency, will provide additional support eventually.
Amid violent fluctuations during which the rouble reached a new low of 121.53 against the greenback on the Moscow Exchange has already sent thousands of soldiers into Ukraine days earlier on February 24, the Russian rouble incurred a record high of 50.1 two months ago. At the time being, the rouble’s volatility seems to have abated.
When statistics revealed that consumer prices in Russia fell for the sixth week in a row, the yield on 2s OFZ treasury bonds dropped from yesterday’s closing of 9.01% to 8.90%. These bonds and their prices have an inverse relationship.
The central bank last reduced its benchmark rate to 8% in the past month and announced that it would examine the necessity for additional reductions as inflation falls and an economic recession lasts more than initially anticipated.
Rate reductions increase bond prices and relieve upward strain on the rouble by rendering deposits not as desirable, whereas they also help the stock market by encouraging traders to invest their money in securities with higher yields.
