Brussels, Europe Brief News – Due to western sanctions on Russia, Rouble has experienced a record low on Monday in its value against the US dollar. The ongoing crisis is affecting the financial markets around the globe.
The Western allies are imposing severe Sanctions on Russia including Cutting some of Russia’s banks from the SWIFT payment system causing havoc to the world stock market.
In response to that, the Russian central bank has increased the interest rates from 9.5% to 20% by calling it an emergency move to tackle economic pressure. The authorities have also suggested Export-focused companies sell off their foreign currency.
The Western sanctions on Russia have not just crippled the Russian economic structure but also caused so much pressure on the financial markets across the world.
European stocks have experienced a low of 1.5%. European banks that are most affected by the sanctions and ongoing Ukraine crisis are Austria’s Raiffeisen Bank, UniCredit and Societe Generale. All these banks experienced a downfall from 10% to 13%.
Still, the fall in world stocks was relatively small, with the MSCI world equity index down 0.3% compared with the 0.6% seen last Thursday.
Peter Garnry, Head of Equity Strategy at Saxo Bank “ The trading environment is highly dynamic, and we maintain a defensive stance as things could get a lot worse from here”.
Since Russian President Vladimir Putin ordered their military personnel to have their nuclear arsenal on High alert, Oil prices have experienced a huge spike.
The rising tension between Russia and Ukraine has increased the chances that oil supplies from the world’s second largest producer could be disrupted.
Homin Lee, Asia macro strategist at Lombard Odier said “ The global economy now faces, in addition to the risk of even more worrisome strategic escalation in Europe, the certainty of significant economic and financial turmoil in Russia as well as all major disruptions to all trades involving the country”.
Safe Havens Shine
The Euro fell 0.6% to $1.1204 and 0.6% to 129.47 versus the yen. On the other side, Australian and New Zealand’s dollars experienced a low of 0.3% and 0.2% respectively.
The money market is trying hard to push back rate hike expectations with investor’s now pricing close to 30 basis points which are worth tightening from the European Central bank.
The Russian Rouble experienced a record low by 30% to 120 per dollar. However it rebounded in its last trade at just over 95.559 to the dollar.
