London - Ukrainian assets tumbled on Wednesday as a renewed wave of violence hit the capital Kiev, adding pressure on Russia's rouble which was at an all-time low to the euro.
The rouble was primarily hit, however, by a foreign currency purchase plan announced by the finance ministry.
Protesters poured into central Kiev square on Wednesday, preparing to confront police anew after the bloodiest day since the former Soviet republic, caught in a geopolitical struggle between Russia and the West, won its independence.
At least 25 people died in clashes between police and anti-government protesters on Tuesday.
“The situation is obviously aggravating. It looks like it's just going to get worse before it gets better,” said Ilan Solot, emerging currency strategist at Brown Brothers Harriman.
Ukraine's dollar bonds fell across the curve.
The bond maturing in 2023 fell more than 1 cent on the dollar 81.09, its lowest since early December.
The 2020 dollar bond lost 0.4 of a cent while 2014 bonds also fell nearly 1 cent.
The hryvnia currency fell as low as 8.99 but dealers said trading was very thin.
Russia is a key supporter of Ukraine President Viktor Yanukovich and has agreed to pay $2 billion of a promised $15 billion air package to the heavily indebted economy.
The rouble hit an all-time low versus the euro, trading nearly half a percent down on the day at 49.03.
It fell 1.5 percent to 35.66 against the dollar, its weakest since 2009.
This has pushed the rouble to a fresh low of 41.65 against the dollar-euro basket the central bank uses to gauge the currency's nominal exchange rate.
Russia's Finance Ministry said late on Tuesday it would buy nearly $6 billion in foreign currency on the market to replenish one of its sovereign funds, a move that will decrease the central bank's daily foreign exchange market interventions.
Russian stocks also traded lower, with the RTS index down 0.9 percent.
Some of the mood spread to other areas of central and eastern Europe and there was general weakness across emerging markets.
The Hungarian forint lost 1.3 percent to 312.56 per euro, a day after the central bank cut interest rates by a bigger-than-expected 15 basis points on Tuesday.
Hungary, which has the highest debt in the region, is vulnerable after the central bank's move bucked the trend of other emerging economies, such as Turkey, which have raised rates.
The Turkish lira, South African rand and Indian rupee - some of the Fragile Five economies with a high reliance on external capital - all fell against the dollar.
The benchmark MSCI equity index was flat on the day, with strong Chinese stocks countering negative sentiment from Ukraine and Russia.
“We're looking at a confidence crisis in EM. EM has become a dirty market word. We've had a severe market correction. Hedge funds are looking at maximum short positions on EM,” Benoit Anne, head of emerging market strategy at Societe Generale told the Emerging Markets Trade Association late on Tuesday.
“The only macro strategy that worked was short EM. It's done fantastically well. But real money is eager to go back in and I see renewed appetite.” - Reuters