The US dollar rose to a new two-decade high on Wednesday as Russia announced the mobilization of 300,000 military reserves in response to the intensification of the war in Ukraine.
President Vladimir Putin called an urgent partial mobilization of Russian citizens in a televised national speech on Wednesday, threatening to use “all the tools at our disposal” to preserve Russia “and our people.” He even mentioned the possibility of using nuclear weapons.
The dollar rose 0.4% versus a basket of major currencies following the speech, reaching its highest level since 2002. During times of global conflict, investors frequently seek safe haven in US dollar assets.
Oil also went up
Oil prices have also risen. Brent crude prices rose 2.5% to little under $93 a barrel, the worldwide benchmark.
Following the statement, Russian equities fell 3.5% on Wednesday, adding to the huge losses suffered Tuesday after Putin promised to organize referendums to annex portions of Ukraine still seized by Russian military. The ruble fell roughly 3% versus the US dollar.
Asian equities have retreated. While European indices initially fell, they ended the day flat or slightly higher ahead of the Federal Reserve’s next policy statement.
The euro originally fell 0.7% to 98 cents ($0.97) versus the US dollar, but has subsequently risen. The currency, which is used by 19 European nations, fell below the dollar in late August, rattled by growing inflation and the oil crisis precipitated by Russia’s invasion of Ukraine in February.
The British pound fell 0.4% against the US dollar to just over $1.13, a new 37-year low, before rebounding marginally.
The war has increased to the anxiety of investors, since it makes it more difficult to anticipate when inflation would abate and might force central banks to retain an aggressive stance for an extended period of time.
