MOSCOW: The Russian rouble hovered near 100 to the US dollar on Monday after reports that the US administration had decided to allow Ukraine to make strikes with US weapons deep into Russia.

By 0830 GMT, the rouble was steady at 99.90 against the dollar and 105.48 to the euro, according to LSEG data.

The Russian currency weakened 0.6% against the yuan to 13.77 in trade on the Moscow stock exchange.

“Today, amid renewed geopolitical uncertainty, volatility in the currency market may increase again,” BCS brokerage analysts said.

The rouble and the Russian stock market started rising on Friday in what some analysts called a “Scholz rally”, following German Chancellor Olaf Scholz’s first conversation with Russian President Vladimir Putin in nearly two years on Friday.

Analysts said a reversal of these gains was likely following reports about the US administration’s decision on missiles.

Brent crude oil, a global benchmark for Russia’s main export, also reacted to geopolitical tensions, rising 0.6% to $71.40 a barrel after fighting between Russia and Ukraine intensified over the weekend.

Western sanctions imposed on the Moscow Exchange (MOEX) and its clearing agent, the National Clearing Centre, on June 12 stopped all trade in dollars and euros at MOEX, making the yuan the most-traded foreign currency in Russia.

Strong dollar drag Russian rouble down

Trade in dollars and euros has shifted to the over-the-counter (OTC) market, obscuring price data and making the rouble’s exchange rate more volatile.

One-day rouble-dollar futures, which trade on the Moscow exchange and are a guide for OTC market rates, were up 0.6% at 100.04.

The central bank’s official exchange rate, which it calculates using OTC data, was last set at 99.99 to the dollar.