Russian Ruble Tumbles After U.S. Syria Strikes as Politics Eclipse Carry

• Russian Ruble Tumbles After U.S. Syria Strikes as Politics Eclipse Carry

Russia’s ruble fell the most among emerging-market currencies on Friday and the nation’s borrowing costs surged after U.S. airstrikes on Syria dashed hopes for an improvement in ties under Donald Trump.

The Russian currency sank 1.1 percent against the dollar at the start of trading in Moscow, the most in almost a month, after Russian President Vladimir Putin slammed the attacks as “aggression” and said they would damage relations. Credit default swaps climbed for the first time this week, stocks slid, and yields on local-currency government bonds had the biggest increase since February.

Rebounding oil prices and high real interest rates have made the ruble one of the best-performing currencies among developing nations this year. Russian markets had rallied on hopes of a detente in the wake of Trump’s November election, but the strikes, in response to Syrian leader Bashar al-Assad’s alleged use of poison gas to kill scores of civilians, show the chances are fading.

“Geopolitics is driving up the risk premium,” Alexander Losev, chief executive officer at Sputnik Asset Management in Moscow, said by email. “Now the old difference in interest rates and stable oil prices are no longer sufficient to close your eyes to the political and geo-economic events and continue with the carry trade. Volatility is climbing and speculators are closing a part of their ruble positions.”