The Russian rouble is rising in small amounts

On Wednesday, the Russian rouble rose against the dollar in Moscow and offshore trading, though volumes remained light and other Russian assets remained untraded.

Three weeks after the Russian invasion began, bombs rained down on Ukrainian cities, despite talks of compromise from both Moscow and Kyiv in peace talks.

Meanwhile, market participants focused on whether Russia would pay sovereign debt coupons due Wednesday or begin a 30-day grace period. It could default on its foreign sovereign debt for the first time in over a century.

There haven’t been any liquidity in the rouble, so tiny moves, tiny amounts of volume, and demand for the currency, rather than anything, can cause massive movements up.

On Wednesday, Russia will make $117 million in payments on two dollar-denominated Eurobonds. The events in Ukraine and the sanctions imposed on Moscow, as a result, have precipitated Russia’s worst economic crisis since the Soviet Union’s demise in 1991.

By central bank order, the Moscow stock exchange remained closed mainly and will remain so for the remainder of the week.

On Tuesday, the European Union imposed new sanctions on Russia, including bans on Russian energy sector investments, luxury goods exports to Moscow, and Russian steel imports.

Sterling extends gains

The Sterling rose against the dollar in European trade for the third straight session, reflecting improved risk appetite in the market and hopes for a resolution to the Ukrainian crisis.

The dollar index fell more than 0.2 percent, reaching week lows against a basket of major rivals and as Ukraine peace talks progressed.

Russian officials indicated significant progress in negotiations with the Ukrainian side, with hopes of reaching an agreement soon. Kremlin sources said that Russia would accept a solution in which Ukraine would be a neutral state with a standing army, similar to Sweden. Most analysts expect the UK to raise interest rates to slow soaring inflation this week.