In Russia began to “tighten their belts” before the introduction of United States most ambitious of sanctions
The US plans to extend economic sanctions against Russia for its aggression against Ukraine, participation in the war in Syria and influence during the presidential elections in the United States. Although the decision had not yet been finally adopted, the sanctions can be and generally is not extended, all the same in Moscow are actively preparing for the upcoming restrictionsthat will be even more powerful than the previous one.
The head of the Central Bank Elvira Nabiullina said that the sanctions, they say, will not affect Russia. The threat of a broader effort that was probably one of the reasons why politicians chose to cut interest rates last week. This is reported by Morgan Stanley and Raiffeisenbank, writes Bloomberg. On Tuesday, the Treasury Department expanded the list of individuals and companies fined because of the annexation of Crimea in March 2014.
Experts say strengthening the “cold” in the geopolitical relations. There is a threat of capital outflow from the Russian Federation. And the price of oil on the world market fell. At the same time, the Russian ruble came in second place in the world on the worst-case ratio with the dollar in June. Therefore, the Central Bank of Russia weakened the monetary stimulus by 0.25%, after a more significant decline in April.
“One of the reasons why they chose only 25 basis points, there was uncertainty regarding geopolitical conditions. In fact, Russian policy is “a war economy”, with increased defense spending and a long expensive battle with the West. The Russians are concerned about the new U.S. sanctions, because the scale of the new bill Congress is much more than all that came before it. They were shocked by all this,” said a senior strategist at Bluebay Asset Management in London Timothy ash.
The draft us sanctions against Russia provides for additional restrictions on the ability of Russian banks and energy companies to raise capital. Also in the list there are new sanctions on state enterprises of railway transport, metallurgical and mining industry, in the field of energy pipelines. However, the project does not contain restrictions on public debt or derivatives, but there was a study of the possible impact of such restrictions.
Meanwhile, investors take money out of the largest exchange-traded Fund that tracks Russian equities at the fastest pace since March. Traders withdrew $ 21.3 million with VanEck Vectors Russia on Thursday, raising the six-day outflow to 149 million dollars. Last week also fell Russian Micex stock index.
Head of the Central Bank Elvira Nabiullina said that the American sanctions which can be directed on the Russian bond market, suffer losses to foreign owners. At the same time, saying sanctions will create the possibility of bond-buying by local investors.
“Rate cuts may slow down due to any external risks caused by the sanctions if they affect inflation and financial stability are priorities for the Bank of Russia”, – said the chief economist for Russia at ING Groep NV (Moscow) Dmitry Polevoy.
Before Russia was able to circumvent the tension, on Tuesday completed the sale of external debt in the amount of $ 3 billion and the bulk of the foreign applications came from U.S. investors. However, some European investors are unable to participate in the sale of Eurobonds, as the state Bank, which organized the deal, is the subject of sanctions.
The Central Bank estimates that non-residents possess of 1.83 trillion (30.7 billion US dollars) sovereign ruble bonds on may 1, which is almost one third of the bond market. Russian bonds issued in local currency returned to the level of 8.25% this year in dollar terms.
The probability that the US will impose sanctions on public debt “rather low”, says Dmitry Polevoy from ING, he expects greater certainty, after the President of Russia Vladimir Putin and US President Donald trump will meet at the G20 summit in Germany in early July.
We will remind, the European Union extended sanctions against Russia for six months.
Videos, the failure to Moscow Minsk agreements sanctions restrictions will be in effect for another six months