Euro Volatility Index Rises as Ukraine Crisis Escalates

The euro’s one-month volatility jumped to a 15-month high on Tuesday, as the single currency was hurt by increased risk aversion amid rising gas prices and escalating tensions in Ukraine.

Russian President Vladimir Putin ordered troops into two breakaway regions in Ukraine, sending the one-month euro volatility index to its highest level since November 2020 as the West pledged sanctions in response to Russia’s moves.

The euro rose 0.2 percent against the dollar to $1.1331 by 0910 GMT, after touching an eight-day low.

Meanwhile, the demand for safe-haven currencies increased. The yen hit a three-week high and the Swiss franc remained near a one-month high against the dollar hit on Monday.

The yen rose by 0.1 percent to $114.8, after briefly touching the 114.50 level, while the Swiss franc fell 0.4 percent against the euro to 1.039, after reaching a one-month high of 1.0339 against the single currency.

Analysts said that the euro’s decline to below 1.04 against the Swiss franc confirmed market fears that any escalation of the Ukraine crisis would affect the eurozone.

The US dollar, another safe haven, fell 0.1 percent to 96.013 against a basket of currencies including the euro, as investors awaited further developments in the crisis.

The United States and its European allies are preparing to announce sanctions on Russia on Tuesday.

Cryptocurrencies were also under pressure, with Bitcoin dropping to a nearly three-week low of $36,370.