European currencies are falling to new lows as the war in Ukraine escalates, prompting macro traders to sell some of their most liquid assets.
The euro fell below par against the safe-haven Swiss franc in Asia trade on Monday, falling to that level for the first time since January 2015 amid investor concerns about the recession. Russian invasion of Ukraine.
The Polish zloty and the Hungarian forint fell to all-time lows against the euro. Every Eastern European currency has depreciated against the dollar in the past week, leading to a devaluation of the ruble.
Daisaku Ueno, currency strategist at Mitsubishi UFJ Morgan Stanley Securities Co. “It is impossible to rationally judge when European currencies will stop depreciating until we see clues to the end of Russia’s invasion of Ukraine,” said in Tokyo.
“Currencies of countries near war zones have been sold as they will be most affected by the backlash to sanctions against Russia.”
There isn’t a single European currency that hasn’t been sold this month. The euro, the second most traded currency in the world and one of the “most liquid currencies” in Europe, has fallen about 5pc over the past month.
The euro fell 0.5pc to $1.0873 in Asia on Monday after the Biden administration was reportedly considering a ban on Russian oil imports. The common currency traded as low as 0.9972 against the Swiss franc.
The ruble was pointed 11pc lower at 137.44 per dollar in foreign trading.
“The war in Ukraine will hit the European economy the hardest because of its dependence on Russian oil,” said Takuya Kanda, director general at the Gaitame.com Research Institute in Tokyo. “The euro could fall to $1.06.”
Data from the Commodity Futures Trading Commission showed hedge funds got the wrong direction on the euro-franc pair last week. Leveraged funds slashed the net rate on the euro to its lowest level since July in the week ending March 1 while boosting prices on the franc.
Countries east of the European Union are stepping up market interventions to protect their currencies from a sell-off. The Czech central bank sold foreign currency on Friday, joining the monetary authority in Poland, which intervened for the third time last week.
The Swiss National Bank says it is ready to intervene and tackle the rapidly rising franc, Swiss newspaper Schweiz am Wochenende reported, citing SNB Board Member Andrea Maechler.
https://www.independent.ie/business/world/european-currencies-crumble-with-rouble-on-oil-embargo-threat-41418599.html European currencies crash against the ruble on the threat of an oil embargo