Ruble Trader’s Day Reveals Liquidity Is Vanishing Everywhere

(Bloomberg) — ‘Too risky to deal in’ is the mantra across foreign-exchange trading floors as investors step back from trading Russia’s currency.

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Spreads on the ruble have widened by eight times, with market makers from Sydney to Hong Kong pulling back, traders said. The currency was indicated 26% lower in offshore trading as the sanctions placed on Russia and its central bank ratchet up concern over the ripple effects.

Moscow Exchange said it will start currency and money-market trading only at 10 a.m. local time, about three hours later than normal.

“No trades are coming through at all on the ruble,” said Nick Twidale, chief executive Asia Pacific at FP Markets in Sydney. “When anything like this happens, we cut leverage and basically tell people to close positions. It’s just too high risk.”

Russian assets have plummeted in the wake of the nation’s invasion of Ukraine, with the ruble’s slump making it the worst-performing emerging-market currency in February. Foreign-exchange market participants from Sydney to Hong Kong are freezing ruble trading as they mull the effects of the harshest sanctions placed on a major economy in a generation.

Read More: Russians Rush for Dollars as Sanctions Threaten Ruble Collapse

“Banks will be scared of settling the other side on sanction risk,” said Jeffrey Halley, senior market analyst at Oanda in Singapore. The number of trades is falling as investors factor in the risks involved in settlement of interbank trading with Russian participants, he said.

National Australia Bank Ltd.’s Ray Attrill in Sydney was glued to his desk all Sunday in preparation for Monday’s volatility.

“We are hearing ruble being quoted in 114-119 area locally,” said Attrill, head of FX strategy and markets, who started his work day at 5 a.m. local time. “This may create a preference for using the non-deliverable forwards market but which only really trades once London is open.”

The rout is extending to futures markets.

CME ruble futures tumbled more than 30% after the open, though some trades are now starting to trickle through, according to Matthew Simpson, senior market analyst at City Index.

“The ruble is in a freefall as the gravity of sanctions and restrictions on Russia’s central bank take effect,” he said. “CME futures fell over 30% after the open, which is not what Russians who are queuing up at cash points across the country want to hear right now.”