Russian rouble hits 2-year high vs dollar, euro as EU proposes sanctions

The Russian rouble has jumped to around a two-year high against both the dollar and the euro, retaining the support of hefty capital controls as the European Union proposes a new package of sanctions against Russia for events in Ukraine.

By 0721 GMT on Wednesday, the rouble was 0.7 percent stronger against the dollar at 70.49, after touching 68.6250 in early trade, its strongest since June 2020.

It had gained 1.2 percent to trade at 73.84 versus the euro, earlier hitting 72.00, its strongest point since February 2020.

Movements on Russian markets are affected by the rouble being propped up by capital controls, while stocks are trading with a ban on short selling and foreign players barred from ditching shares in Russian companies without permission.

Market participants question if the current rate is sustainable in light of the curbs, after the rouble sank to a record low in early March as Western nations pounded Moscow and its financial system with unprecedented sanctions.

Russia's last-minute dollar bond payment on Friday, an apparent swerve to avoid default after previously vowing to pay only in roubles, helped relieve some pressure on its assets.

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'Unpleasant, but not critical'

European Commission President Ursula von der Leyen proposed a phased oil embargo on Russia, as well as sanctioning its top bank and banning its broadcasters from European airwaves, in a bid to deepen Moscow's isolation.

Shares in Sberbank rose 0.3 percent after the European Commission proposed removing Russia's biggest bank and two others from the international SWIFT transaction and messaging system in another blow to its financial system over the Ukraine conflict.

Veles Capital analysts said the sanctions on banks were unpleasant for the sector, but not critical.

Russian stock indexes were mixed.

The dollar-denominated RTS index was up 1.2 percent to 1,094.8 points. The rouble-based MOEX Russian index was 0.2 percent lower at 2,439.2 points.

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