The USA to hit Russian commodity bundle?
'Crushing sanctions against Putin's Russia' can become sanctions against ordinary Russians
The sharp weakening of the ruble, which began in the middle of the week, has dragged on for several days. The Russian ruble fell on Wednesday, Thursday and Friday to the news of the new US sanctions against major Russian banks and a possible ban on operations with securities of the Ministry of Finance of Russia. Experts interviewed by Realnoe Vremay say that the situation can develop in both directions; it is also possible that the Russian currency will win back the losses. However, if this does not happen, it will hurt not only state banks, but also ordinary citizens — a weak ruble threatens a jump in prices.
New crushing sanctions instead of old useless ones
On August 8, Kommersant newspaper published the content of the draft bill on new sanctions against Russia introduced by Senator Lindsay Graham. The document 'Defending American Security from Kremlin Aggression Act of 2018' is intended as a response to the ''continued interference'' in the US elections, ''malign influence in Syria'', as well as ''aggression in Crimea''.
On his personal website, Republican Graham noted that the sanctions adopted to date have proved ineffective and cannot keep Russia from trying to influence future campaigns. ''Our goal is to change the status quo and impose crushing sanctions and other measures against Putin's Russia until he ceases and desists meddling in the U.S. electoral process, halts cyberattacks on U.S. infrastructure, removes Russia from Ukraine, and ceases efforts to create chaos in Syria,'' the senator writes.
Among the measures proposed by Graham there were restrictions on the Russian banking sector, as well as the ban on operations with government bonds. It is proposed to freeze the assets of seven banks in the United States and block their transactions through correspondent accounts in American financial institutions. According to the bill, Sberbank, VTB, Promsvyazbank and Vnesheconombank, in respect of which other sanctions are already in force, may fall under this bill.
Also, senators want to ban US citizens and companies from participating in operations with the Russian state debt, if the period of its circulation exceeds 2 weeks. This measure, which has been discussed since last year, will apply only to new bond issues.
The news of the new package of sanctions has had a bad impact on the ruble and the stock market. On Wednesday, the Russian currency fell against the dollar by 1,36 rubles — at the end of trading the indicative dollar rate for the first time in almost a month and a half reached 64,85 ruble. On August 9, the ruble dropped even more — to 66,3/$. During Friday, the dollar reached 67 rubles — the highest level since August 2016.
Besides, media publications have collapsed quotes of the largest state banks. On August 8, Sberbank shares fell by 4,26%, although the next day the fall was partially bounced back. VTB securities lost 2,37% on the day of the publication of Kommersant, and no correction was followed the next day.
On the night of August 9, it became known about another package of sanctions — this time the initiator was the US State Department, and the reason was 'the Skripal case''. According to The Washington Post, the next sanctions may hit Aeroflot, as well as affect the diplomatic relations and the export of American goods.
The Central Bank tried to reduce the degree of tension in the financial market and stop the sale of ruble assets. On Friday, they published a post, in which they claimed that they kept the situation under control and ''has enough tools to prevent threats to financial stability''.
''The increased volatility of the ruble exchange rate in recent days is a natural reaction of the financial market to the news of new potential sanctions against the background of changes in global financial markets. Such episodes of volatility have already arisen earlier against the background of the discussion of sanctions restrictions and were of a temporary nature. The support for the ruble is still provided by significant sales of export foreign exchange earnings,'' the report states.
''While there is a threat of further sanctions, the market will be volatile''
Experts interviewed by Realnoe Vremya say that it is difficult to predict the development of the situation — it can develop in both directions. It is possible that the ruble will win back the losses, but the fall may drag on. In the latter case, there is a threat of even greater acceleration of inflation.