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Russian central bank says U.S. sanctions caused volatility in forex market

BY Reuters | ECONOMIC | 07:00 AM EST

MOSCOW, Nov 29 (Reuters) - The latest round of U.S. sanctions on Russian financial institutions caused volatility in the Russian forex market, but the rouble's exchange rate will be driven by fundamentals in the medium and long term, the central bank said on Friday.

"As demonstrated by previous episodes of sanctions, infrastructure problems arise, complicating export and import flows. Nevertheless, in the medium and long term, exchange rate dynamics are determined by fundamental factors," the regulator said in its financial stability report.

The central bank also recommended that commercial banks reduce their assets in foreign currency, predominantly China's yuan, warning that an excess of such assets could lead to increased volatility in the market. (Reporting by Elena Fabrichnaya, writing by Gleb Bryanski; Editing by Alex Richardson)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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