Ruble falls as Russia, Ukraine trade accusations over seized ships

MOSCOW: The ruble weakened to its lowest since mid-November yesterday as market players priced in risks carried by Russia’s seizure of Ukrainian naval ships off the coast of Russia-annexed Crimea.

Having largely ignored a sell-off on the oil market last week, the ruble took a hit from concerns about the standoff between Russia and Ukraine that reminded investors of 2014, when Moscow annexed Crimea and was stung by Western sanctions. Russia seized three Ukrainian naval ships on Sunday after opening fire on them and wounding several sailors, escalating tensions between the two countries.

Yestrday Ukrainian President Petro Poroshenko signed a decree introducing martial law in Ukraine for two months following the incident, though it must still be approved by the country’s parliament.

The rouble dropped to 67.17 versus the dollar for the first time since Nov. 14, heading away from levels of around 65.50 seen last week. As of 1318 GMT, the ruble shed 1.4 percent to 67.13 against the greenback and was on track to post its largest one-day slide since Nov. 9. “The selling pressure on the Russian ruble increased after Russia attacked Ukrainian warships reigniting simmering conflict between the two countries,” said Piotr Matys, EM FX Strategist at Rabobank in London. “The resurfacing of geopolitical risk that may lead to another round of punitive measures against Russia accompanied by the precipitous fall in oil prices since the beginning of October leaves the bias skewed to the upside in USD/RUB,” Matys said.

Against the euro, the ruble also fell, shedding 1.9 percent of its value to 76.44.

“The escalation of conflict between Russia and