Russian currency tumbles to record low as markets react to invasion of Ukraine

The Russian ruble fell to the lowest exchange rate ever against the U.S. dollar early Thursday as investors dumped Russian assets following its attack on Ukraine.

The ruble fell 6% against the U.S. dollar, with one dollar buying 89 rubles. This was the lowest level on record, according to The Wall Street Journal, citing FactSet. It has since bounced back and is fluctuating between 84 and 88 rubles per dollar.

Investors have been selling off Russian assets across the board as Russian President Vladimir Putin declared a “special military operation” against Ukraine late Wednesday evening. The Moscow stock exchange’s benchmark index, the MOEX, dropped almost 14% when trading resumed Thursday morning.

Analysts said that Russia’s economy, which relies mainly on exporting commodities like gas, will be hit hard by any sanctions in response to its military actions.

Sanctions will “be in place as long as Putin is president and that’s going to hit growth, that’s going to hit investment,” said Charles Robertson, global chief economist at Renaissance Capital.

Russian government bonds saw record spikes, with the yield on a Russian dollar bond maturing in June 2027 shooting up to 19% Thursday from 7% Wednesday, according to WSJ, citing Tradeweb. Bond yields rise when prices fall.

American stock markets were down Thursday morning but shares in defense companies saw a boost in pre-market trading. Northrup Grummond was up 6.4% before the opening bell, while Lockheed Martin was up 2.9% and Raytheon Technologies up 2.1%.

Energy stocks also saw a large bump as the price of oil climbed passed $100 a barrel for the first time since 2014. Crude producers Chevron, Occidental Petroleum, ConocoPhillips and Devon Energy were all up 3% or more premarket, while oil-services firms Baker Hughes and Halliburton were each up around 2%.