Spillover effects of Ruble’s turmoil on foreign exchange markets after the invasion of Ukraine

Shin-ichi Fukuda

Applied Economics, 2025, vol. 57, issue 9, 951-955

Abstract: Russia’s invasion of Ukraine significantly impacted the global economy. This study examines the asymmetric spillover effects of dramatic fluctuations in the ruble on other currencies when Western countries imposed economic sanctions on Russia. Under the sanctions, the ruble showed not only a large depreciation but also a large appreciation. Using hourly data from late February to mid-March 2022, we explore their effects on 10 major currencies. We find that a large depreciation caused a depreciation in the European currencies. This might reflect the fact that sanctions on Russia damaged European economies, which relied heavily on Russian energy. However, we also find that a large appreciation led to a significant depreciation of the Chinese yuan (CNY) and a significant appreciation of the Swiss franc (CHF). The CNY depreciated by 0.2% and the CHF appreciated by 0.8% when the ruble appreciated by 10%. Noting that a large appreciation occurred because of Russia’s large-scale interventions in the foreign exchange market, this implies that the Russian government defended the ruble at unprecedented scales by selling CNYs and purchasing CHFs. A rise of new bipolarized world currency regimes caused a new spillover effect on economic partners after the invasion.

Date: 2025
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DOI: 10.1080/00036846.2024.2311056

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