Contagion fears ignited by ruble moves

Traders warn of contagion in currency markets

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The dramatic weakening of the Russian ruble against the US dollar has led to a state of fear in foreign exchange markets as the spreads of other emerging market currency pairs widen out and participants warn of a liquidity shortage in traditionally healthy pairs.

The ruble hit above 80 against the dollar on December 16 – a drop of more than 11% and the worst intraday fall since 1998 – despite the Russian central bank hiking rates by 6.5 basis points to 17% on Monday night, as falling oil prices

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