The Russian rouble tumbled to a record low on Thursday, the euro sank to a multi-year low to the Swiss franc, and the yen jumped after Russian forces attacked Ukraine, firing missiles at several cities and landing troops on its south coast.
The Ukrainian foreign minister said Russia had launched a full-scale invasion and explosions could be hear in the capital.
Investors dumped the Russian currency and rushed into safe-havens. Riskier currencies such as the Australian dollar that move in tandem with investor sentiment also skidded.
Volatility across foreign exchange markets soared, with one commonly followed measure hitting its highest since December 2020 (.DBCVIX).
MUFG analyst Lee Hardman said risk-off sentiment would “dominate in the near-term favouring further US dollar, yen and Swiss franc strength.
“In contrast, risks remain heavily tilted to the downside for the rouble and other European currencies which are more sensitive to negative spillovers from military action in Ukraine,” he said.
The rouble weakened to as low as 89.98 per dollar. The US currency was last up 7 per cent against the currency, with selling pressure building again as European markets opened.
The euro fell as much as 0.84 per cent to $1.1209 , the lowest level since Jan. 31.
The Swiss franc soared to its highest since 2015 versus the euro at 1.029 before falling back. The euro was last down 0.3 per cent at 1.0352 francs.
The US dollar, another safe-haven currency, initially rose, with the index as much as 0.60 per cent to 96.762 for the first time since Jan. 31, before it gave up some of those gains.
Moves in the Japanese yen were not as dramatic, with the currency last up 0.2 per cent at 114.74.
The Australian dollar dropped as much as 0.90 per cent to $0.7167 and the New Zealand dollar slid as much as 1 per cent to $0.6706.
“The situation certainly looks like it’s going to get worse before it gets better, and that means the commodity currencies can weaken,” said Joseph Capurso, a strategist at Commonwealth Bank of Australia.
REUTERS