The ruble weakened temporarily by almost 3% against the dollar on Monday, the most this year, after a mutiny by mercenary commander Yevgeny Prigozhin, whose brief uprising represents the biggest threat to President Vladimir Putin’s political control in his almost quarter century in power.
The Russian currency then erased losses to trade 0.1% higher at 84.59 per dollar at 1:01 p.m. in Moscow. Stocks declined, partially erasing the gain of recent months and stepping away from pre-war levels.
The “Russian currency reduces losses as fears over the weekend’s events subside,” Alfa Bank strategist John Walsh writes in a note. Although the market has digested most of the shock, he said, events are intensifying inflation risks.
Prigozhin, leader of the Wagner mercenary group, pulled his fighters back late Saturday after his army marched to within 125 miles (201 kilometers) of the Russian capital, demanding the removal of Putin’s army chiefs. He pulled back after Belarusian leader Alexander Lukashenko helped to broker a deal that defused the challenge.
“Ongoing uncertainty is likely to keep the ruble still under pressure,” UniCredit AG analysts said in an emailed report, forecasting a fall toward 90 per dollar.
READ: Putin Faces Historic Threat to Absolute Grip on Power in Russia
Russian banks increased their exchange rates on Saturday to more than 100 rubles per dollar as Prigozhin’s army advanced on Moscow. A day later, after he said he’d withdraw, the rates were cut back to previous levels.
Russia’s equity IMOEX Index was down 1.5%, with Lukoil PJSC and MMK Group both declining.
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