The Russian stock market and the ruble fell on Monday as geopolitical tensions escalated over fears that Russia would attack Ukraine.
Shares of the RTS index fell more than 8%, After two weeks of steady decline, at the same time The Russian currency fell to a one-year low of 79 rubles (-2.3%) against the dollar.
“We expect Russian stocks to extend losses today as geopolitical tensions rise over the weekend“, Alfa Bank analysts said.
Renaissance Capital said in a note to customers The ruble could fall to 20% against the dollar in the event of a military increase.
Western officials were scheduled to meet Monday in an attempt to create sanctions against Moscow if Russia invades Ukraine.
Tensions are running high as Russia deploys about 100,000 troops on its neighboring borders. Britain and the United States have ordered the repatriation of some staff and their families from embassies in Ukraine. For its part, it insists that Moscow has no intention of invading.
Several rounds of talks between Russia and the West have so far failed to defuse tensions. The current fears of a Russian invasion have been growing since Ukraine annexed Crimea in 2014.
Russian assets could come under further pressure if new sanctions are imposedWestern powers say Moscow’s participation in the war against Ukraine is a threat, but Russian officials say the country’s finances are healthy and its economic base is solid.
In turn, Moscow is also struggling The increase in COVID-19 cases reached a new record this Monday with more than 65,000 new cases.
Russian and Ukrainian assets will be at the forefront of the market downturn if there is potential military action. Dollar bonds from both countries have downgraded their counterparts in recent months as investors cut their exposure amid the expansion between Washington and its allies and Moscow.
Ukraine’s fixed-income markets are primarily competing with emerging market investors, while Russia’s overall position in the capital markets has shrunk in recent years due to sanctions and geopolitical tensions, thereby mitigating the threat of infection.
However, the Russian ruble and the Ukrainian hryvnia are also affected, making them Coins with the worst performance in emerging markets so far this year.
Chris Turner, ING’s global head of markets, said the geopolitical currency on the Ukraine-Russia border provided “significant uncertainty” for the currency markets. “Events in late 2014 reminded us of the liquidity gap and the hoarding of US dollars, which led to a significant fall in the ruble,” Turner said.
(With AFP and Reuters information)
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