Early this week, on Monday, Russia's central bank stepped in to halt the ruble's rapid slide as it hit a 14-month low against the dollar, extending prior losses in a geopolitics-led rout. The near free fall wiped out tens of billions of dollars from Russia's largest firms as some NATO countries began sending deployments of jets and frigates toward eastern Europe on alarmist headlines that Moscow was set to order an invasion of Ukraine.
However, while the week opened looking like the region was on the brink of war, it was Ukrainian leaders themselves attempting to walk back the claims of "imminent" invasion, which in turn gave way to some level of reported progress made in high-level dialogue - particularly in Paris involving talks among Russia, Ukraine, Germany, and France. Further suggesting that deescalation is in the air, the ruble is now quickly clawing back drastic losses, along with a rebound across Russian markets more broadly.
"Russia’s ruble advances by the most since May 7 after the Foreign Ministry said war with Ukraine would be unthinkable," Bloomberg reports. Simultaneously on Thursday Belarus state officials confirmed that the current Russian military assets in the country would depart after February joint drills wrap up. The West had condemned Russia's sending forces into its partner country, which had included S-400 missile deployments.
And The Moscow Times observes of the rebound, "The ruble was trading below 78 to the U.S. dollar on Thursday afternoon, having surpassed the landmark level of 80 on Wednesday night, when the U.S. and NATO delivered their formal responses to Russia’s demands for a sweeping new security pact in Europe."
"State-owned energy companies and banks topped the leaderboard, with Rosneft, Gazprom and Sberbank all up by more than 8%," the report notes. This a day after Moscow finally received a long awaited written response from the US over security proposals submitted earlier this month.
While FM Lavrov said the US "deliberately avoided" addressing Russia's central concern of security guarantees pledging no more NATO expansion eastward, he still acknowledged the document to be a basis of further US-Russia dialogue, suggesting further optimism the two sides are backing away from the precipice. "The content of the document - there is a reaction that allows us to count on the start of a serious conversation, but on secondary issues," Lavrov underscored.
Meanwhile, the White House is still signaling the possible ramping up of sanctions on Russia - even advancing the threat of personal sanctions on Putin himself - but only in the scenario of a Russian military incursion into Ukraine.
Deputy Chairman of the Russian Security Council and former president Dmitry Medvedev addressed potential "sanctions from hell" in an interview on Thursday. "We are really not scared of those sanctions. This is neither a figure of speech nor chest-thumping, it is simply a statement of what is actually happening," he said. "We are currently facing sanctions ‘from hell’. Well, I don’t know what it is, or what it will consist of. ‘Sanctions from hell’, they say." Medvedev added, somewhat comically:
On the other hand, I remember well the words of my colleague Barack Obama who in 2015, I think, after our deadlock due to well-known reasons, with sanctions imposed, delivered a phrase that I remember. He said that the Russian economy was "in tatters." Well, what can [we] say, where is Obama now? Retired, as they say, while our economy is thriving and moving forward," Medvedev emphasized.
He added that while the Russian economy has "plenty" of problems, there's as yet "nothing overly horrific". He concluded, "Let them use [sanctions] as domestic rhetoric, for satisfying their voters or for their political establishment, overall," in reference to the United States.