NZ dollar rises vs. Russian ruble amid mounting tensions over Ukraine

Monday 28th April 2014

The New Zealand dollar gained against the Russian ruble amid escalating tensions between Western countries and Russia over Ukraine.

The kiwi advanced to 30.86 ruble at 8am in Wellington from 30.64 ruble at 5pm on Friday. The local currency was almost unchanged at 85.72 US cents from 85.74 cents at the New York close and 85.70 cents at 5pm on Friday, the ANZAC public holiday.

The New Zealand dollar has climbed 15 percent against its Russian counterpart so far this year, touching a record 31.45 ruble last month, amid rising geopolitical tensions between the West and Russia over control of Ukraine. The Russian central bank on Friday unexpectedly raised interest rates to support the ruble after ratings agency Standard & Poor's cut the country's credit rating to one level above junk following capital flight from Russia.

An accord signed earlier this month by Ukraine, Russia, the US and the European Union is reported to be on the brink of collapse. Adding to the tensions, Reuters reports the US and the European Union are preparing to impose new sanctions on Russia as early as today on concern about Russian attempts to destabilise eastern Ukraine.

"We will... be closely watching the conflict between Russia and Ukraine because an intensification of tensions could certainly rile up the currency market," Kathy Lien, managing director of foreign exchange strategy at BK Asset Management in New York, said in a note. "If Russia decides to embark on a full military invasion of Eastern Ukraine, we could see a deep sell-off in currencies and equities."

The New Zealand dollar was little changed at 87.64 yen from 87.67 yen on Friday ahead of data on Japanese retail sales later today.

Meantime, the local currency was also little changed at 92.38 Australian cents from 92.30 cents on Friday, at 61.93 euro cents from 61.95 cents and at 51.02 British pence from 50.98 pence.

BusinessDesk.co.nz

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