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Euro cuts gains as market focuses on Ukraine talks

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By Stefano Rebaudo

March 17 (Reuters) – The euro gave up some gains on Thursday as investors closely watched developments in Russia-Ukraine peace talks and the U.S. Federal Reserve’s decision to raise interest rates for the first time. time in years.

* The Kremlin said Russia is putting colossal energy into talks on a possible peace deal with Ukraine, while Ukrainian President Volodymyr Zelensky has not changed his position that the country’s international borders should be recognized.

* The euro was up a marginal 0.05% at $1.1034, having hit a one-week high of $1.1067 earlier in the session.

* “The important thing for the currency market is whether the probability of an energy crisis diminishes, which would be clearly inflationary and relevant to the exchange rate for many reasons,” analysts at Commerzbank said. “A very fragile peace would perhaps only help moderately in this regard.”

* Moscow said negotiations with Ukraine resumed on Thursday via videoconference for the fourth day in a row, discussing military, political and humanitarian issues.

* The Russian ruble sank 16% to 105.18 per dollar, after hitting its highest since Feb. 24 at 88.5 per dollar on Wednesday.

* The Federal Reserve began tightening its monetary policy with a quarter-point rate hike on Wednesday, and the central bank said it was willing to do whatever it takes to fight inflation.

* The dollar index, which measures the greenback against a basket of currencies, fell 0.2% to 98,325 units, after hitting a one-week low of 98,151 units.

* The Japanese yen fell 0.1% to 118.67 per dollar, within striking distance of its lowest since February 2016, hitting 119.12 on Wednesday. Meanwhile, the British pound strengthened against the euro and the dollar.

(Reporting by Stefano Rebaudo; Editing in Spanish by Javier Leira)

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