The Russian rouble tumbled to its lowest in nearly 15 months against the dollar in early trade on Monday before paring losses, as investors responded for the first time to an aborted mutiny by heavily armed mercenaries in Russia over the weekend.
By 1010 GMT, the rouble was 0.2% stronger against the dollar at 84.53 RUBUTSTN=MCX, recovering after hitting 87.2300 in early trade, its weakest point since March, 2022.
It had gained 0.3% to trade at 92.07 versus the euro EURRUBTN=MCX and firmed 0.5% against the yuan to 11.66 CNYRUBTOM=MCX, also recovering after hitting its lowest in more than two months against both currencies.
Mercenaries led by Yevgeny Prigozhin withdrew from the southern Russian city of Rostov-on-Don overnight on Saturday under a deal that halted their rapid advance on Moscow but left questions about President Vladimir Putin’s grip on power.
“Politics is again having a negative impact on investors’ mood,” said Alexey Antonov of Alor Broker. “The peak of tensions has passed, but an unpleasant residue will linger for some time.”
With the rouble not trading over the weekend, Russian banks had offered exchange rates well above the official rate beyond 90 to the dollar, but those were gradually easing as tensions subsided.
“The rouble in the cash market sold off sharply on Saturday with buy/offer spreads widening out substantially,” said Goldman Sachs in a note.
But Russian authorities have plenty of resources to support the currency, Goldman Sachs said, viewing fiscal finances as the most important determinant of the currency’s moves.
“Should the response to the events over the weekend be additional spending, we think this would be followed by a weaker rouble.”
First Deputy Prime Minister Andrei Belousov said demand for foreign currency had increased sharply over the weekend in about 15 regions.
“On average, it was about 30%, but most active growth in demand for cash was recorded in southern regions – in Voronezh, Rostov and Lipetsk, as well as in large cities,” Belousov said. “Demand there increased by about 70-80%.”
Investors globally were watching for ripple effects from the aborted mutiny, with some expecting a move into safe havens such as U.S. government bonds and the dollar.
Brent crude oil LCOc1, a global benchmark for Russia’s main export, was up 0.4% at $74.17 a barrel.
Russian stock indexes were lower.
Sinara Investment Bank said Friday evening’s “unexpected and dramatic events” had provoked a sell-off, but the situation’s swift resolution over the weekend meant a further selling spree was unlikely.
“Market participants may be cautious for some time,” Sinara said.
The dollar-denominated RTS index .IRTS was down 0.9% to 1,030.1 points. The rouble-based MOEX Russian index .IMOEX was 1.1% lower at 2,764.1 points.
Most companies’ shares were outperforming the main index after falling sharply in after-hours trading late on Friday.