Ruble falls to lowest since 2016; markets down as Russia attacks Ukraine

Russian markets nosedived as military attacks across Ukraine prompted emergency central bank action and investors braced for the toughest round of Western sanctions yet.

The ruble sank to a record low and stocks had their biggest-ever retreat, forcing a second trading halt by the Moscow Exchange. Bank of Russia said it will intervene in the foreign exchange market for the first time in years and take measures to tame volatility in financial markets.  

The military attack on Ukraine cast a pall over global markets and sparked another bout of global risk aversion. 

“Significant overshooting is possible, and the dollar-ruble at 100 certainly is well in range,” said Commerzbank AG strategist Ulrich Leuchtmann. “I don’t think that interventions will be the main instrument of choice. They can only prevent extreme overshooting. Rate hikes have to follow soon.”

The Russian central bank made no mention of raising interest rates., but said it will provide additional liquidity to banks by offering 1 trillion rubles ($11.5 billion) in an overnight repo auction. Policy makers have increased the benchmark rate by 525 basis points in the past 12 months to tame inflation.