It’s not that either ARS or RUB depreciation will have direct reverberations for the broader markets; they won’t, but the developments do highlight the draw of the U.S. dollar as yields continue to move higher, said Derek Halpenny, head of research global markets EMEA and international securities.
As signs of cracks in the global market begin to appear in the form of volatility in the fiat currencies of distressed nations, perceived safe havens like Bitcoin (BTC) and gold are struggling to gather upside traction. On Monday, the Russian ruble (RUB) depreciated to 102 for U.S. dollar, reaching the lowest since March 2022, while Argentina devalued its already-weak peso (ARS) by 18%.
The fresh slide in RUB and ARS represents early signs of stress in global financial markets, according to MUFG Bank. The uptick in the U.S. dollar index and the hardening of the nominal and inflation-adjusted U.S. government bond yields, which has increased to 1.83%, the highest since 2009, is keeping Bitcoin and gold from rallying.
So far, the supposed signs of cracks have brought little safe-haven demand for Bitcoin, disappointing expectations. Gold, meanwhile, hit a seven-week low of $1,896 per ounce on Tuesday and traded around $1,905 at press time.
If U.S. yields continue to drift higher from here, we are likely to see further ‘cracks’ appear that could have greater implications for broader markets, Halpenny added.