The continuing tense situation on the Ukrainian-Russian border leads to caution and restraint on the foreign exchange and commodity markets. As the euro falls, oil, natural gas and wheat prices rise.
The euro started the new trading week on Monday with losses. In the evening, the common currency cost $ 1.1303, 0.4 percent less than late Friday evening. The continuing tense situation on the Ukrainian-Russian border caused caution and restraint on the financial markets. Currencies that are perceived as safe, such as the US dollar or the Swiss franc, tended to be in demand. On the other hand, foreign currencies, which usually react sensitively to fluctuating stock exchanges, such as the Australian or New Zealand dollar, were under pressure. The Russian ruble recently had to cope with significant losses. The Russian currency fell 1.1 percent.
“It makes sense to minimize risks related to Russia as much as possible and not to actively engage in Russian assets until the risk of a military clash has disappeared,” said Centro Credit Bank economist Yevgeny Suvorov. Investors are stocking up on crude oil for fear of supply disruptions if Russia invades Ukraine. The prices for the Brent and WTI grades rose at times by more than two percent to $96.78 and $95.82 respectively and were at their highest level seven and a half years ago. Natural gas prices also rose. The European natural gas futures contract increased by up to 13.6 percent to EUR 88 per megawatt hour. Russia in particular is an important supplier of this energy source. Fears of a failure in Russian and Ukrainian wheat supplies drove up prices for this food. The US futures contract rose 2 percent to $8.135 a bushel. “Russia and Ukraine are among the three most important grain exporters,” says Commerzbank analyst Carsten Fritsch. “Together they make up more than a quarter of the world’s export supply.”