Russian ruble falls to all-time low following economic sanctions

Ratings agency Fitch warned on Wednesday that Russia is on the brink of defaulting on its debts as sanctions imposed in the wake of the Ukraine war continue to batter its economy. It downgraded Russia’s sovereign debt rating closer to junk territory from B to C.

Fitch said the decision reflected the view a default is imminent. Junk status is the category of countries at risk of not being able to repay their debt.

The agency said in a note: “The severity of international sanctions in response to Russia’s military invasion of Ukraine has heightened macro-financial stability risks, represents a huge shock to Russia’s credit fundamentals and could undermine its willingness to service government debt.”

It comes as Russia’s ruble tumbled to record lows in onshore trading on Wednesday despite measures by Moscow to shore up its battered economy and safeguard the availability of hard currency amid fresh economic sanctions over its invasion of Ukraine.

The ruble jumped to 120.83 to the dollar on the Moscow Exchange before clawing back some losses to trade at 116.95 by midday – still more than 10 percent softer than its Friday close.

Vladimir Putin speaks during his address to the nation at the Kremlin in Moscow (Image: Getty)

A Ukrainian woman looks for food in a rubbish-bin in the center of Odessa

A Ukrainian woman looks for food in a rubbish-bin in the center of Odessa in Ukraine (Image: Getty)

It traded around one percent weaker against the euro at 119.5 after hitting a record 131 per euro in early trade.

Russia’s financial markets have been plunged into turmoil since the invasion. The central bank has more than doubled its key interest rate to 20 percent with the Kremlin rolling out support measures.

However, Russian assets have been sold heavily and the ruble is down about 30 percent against the dollar in Moscow since Russia sent troops into Ukraine on February 24.

Russians are no longer allowed to buy foreign currency at the bank until September 9. People who still have foreign currency in their accounts are allowed to withdraw a maximum of £ 7,593 ($ 10,000).

Supermarket shelves have also been emptying and prices rising. Russians are hoarding sugar, flour, buckwheat, oil and canned food. Milk, cheese, yoghurt and sour cream are all scarce.


Major brands have continued to pull out of Russia, with McDonald's, Coca-Cola, Starbucks and Heineken among the latest

McDonald’s, Coca-Cola, Starbucks and Heineken have pulled out of Russia (Image: Getty)

Russian Presidential Press Secretary Dmitry Peskov

Russian Presidential Press Secretary Dmitry Peskov (Image: Getty)

Experts warn the country is threatened with a doubling of its unemployment rate from just under five to 10 percent.

There are warnings Russia’s economy faces its gravest crisis since the Soviet Union collapsed in 1991.

Dmitry Peskov, spokesman for the Kremlin, labeled the West’s sanctions as “hostile bacchanalia” which had roiled global markets.

He said: “You see the bacchanalia, the hostile bacchanalia, which the West has sown – and that of course makes the situation very difficult and forces us to think seriously.”

Mr Peskov said Russia had been, was and would be a reliable energy supplier when asked about a ban on Russian oil and energy imports announced by US President Joe Biden.

He added that Moscow would now think very seriously about a response, warning: “The situation demands a rather deep analysis – those decisions announced by President Biden.

Woman arrested as student is murdered and raped [LATEST]
Pensioners at sheltered housing block furious with music and parties [REVEALED]
BBC’s Nick Robinson frostily shuts down Putin defender over shelling [REPORT]


Russia versus Ukraine in numbers (Image: Express)

“If you are asking me what Russia is going to do – Russia is going to do what is necessary to defend its interests.”

Prime Minister Mikhail Mishustin announced on Wednesday that Russia must prioritise grain supplies to domestic bakeries over export markets.

He told a government meeting: “This is important to keep the food market in balance and we are closely monitoring prices for the most essential social goods such as food, including bread.”

Russia’s ruling party, United Russia, said on Wednesday a government commission had approved the first step towards nationalising the assets of foreign firms which leave the country.

Nestle, Philip Morris and Imperial Brands joined the list of multinationals stepping back from Russia on Wednesday as pressure mounts from consumers in the West to take a stand against the invasion of Ukraine.

The world’s biggest packaged food group fell in line with rivals Procter & Gamble and Unilever in scaling back investment in Russia, while cigarette maker Philip Morris said it would scale down manufacturing and Imperial went further and suspended it.

Major international premium brands have ceased their activities in Russia

Major international premium brands have ceased their activities in Russia (Image: Getty)

The moves came after Coca-Cola and McDonald’s halted sales in Russia.

Meanwhile, global stock markets rallied in Europe and North America on Wednesday after three straight days of selling.

Oil prices also retreated from peaks scaled over the last week as investors digested the news of Russian oil import bans.

Fawad Razaqzada, market analyst at Think Markets, said: “For now, markets are relieved by the fact we haven’t had any fresh bearish news since yesterday’s announcement of a ban in oil imports from Russia.

“The markets were severely oversold … this is also typical of a bear market when you sometimes see multiple percentage point gains in a short period of time as the shorts are squeezed, before the rally runs out of steam and the downward trend resumes. “

Russia’s invasion and the ensuing sanctions have also played havoc with global supply chains, sent prices soaring across commodities markets and could slow economic growth worldwide.

Dan Scott, chief investment officer at Vontobel, said: “War is inflationary and this war in particular is very inflationary … not just in terms of energy, oil and gas, but it’s inflationary across the commodities complex.”

With additional reporting by Monika Pallenberg

By admin

Leave a Reply

Your email address will not be published.