The Russian rouble interrupted its rally and weakened against both the US dollar and China's yuan on Wednesday following a conversation between US President Donald Trump and Russian President Vladimir Putin that focused on the war in Ukraine.
In the telephone call, Putin agreed to stop attacking Ukrainian energy facilities temporarily but declined to endorse a full 30-day ceasefire that Trump had hoped would be the first step toward a permanent peace deal.
By 0840 GMT, the rouble was down 1.3% at 82.80 against the dollar in the over-the-counter market. Against the Chinese yuan, the rouble was down 1.2% at 11.36 in trade on the Moscow Stock Exchange (MOEX).
The Russian currency hit its strongest levels against both the dollar and the yuan since June 2024 this week. It is up 27% against the dollar so far this year on expectations of easing tensions between Russia and the United States.
Russia's Deputy Prime Minister Alexander Novak said on Tuesday that a return of foreign investors to the Russian market and resulting capital inflows played a role in the rouble rally.
"We are also observing an inflow of foreign capital into the domestic market, taking into account the geopolitical situation," Novak was quoted in the Russian media as saying.
The stronger rouble is helping the central bank fight inflation, its main headache. However, it is also dealing a blow to exporting companies as well as state budget revenues, which depend heavily on oil and gas exports that are traded in dollars.
Denis Popov from PSB bank noted that Novak's statement was the first official confirmation of capital inflows taking place as international investors begin to eye Russian assets again, creating the potential for further strengthening of the rouble.
"Considering that the end of March should see an increase in currency sales by exporters, the risks of further strengthening of the rouble are very high," Popov said.
