Russian currency and stock market endure a steep decline following Putin's remarks regarding Ukraine.
Tumultuous Times for the Ruble
Following Putin's rejection of negotiations with Ukraine, the Russian economy took a turn for the worse: the ruble tumbled, the stock market plunged, and investors were left in a state of uncertainty. This news comes from The Moscow Times.
Selloff Frenzy
After Putin's speech on Wednesday, the Russian markets plummeted downwards. The Kremlin's aggressive stance, dismissing the possibility of a ceasefire and labeling Ukraine as "terrorists," sparked a selloff on the exchange. The Moscow Exchange Index, which had started the day up by 1.3%, ended at 2836.6 points by the close.
The currency market was equally tormented: the dollar jumped by 2.9% on the over-the-counter market, reaching 79.25 rubles. The euro rose to 90.5 rubles, and the yuan reached 11.08 rubles, signaling a 1% drop in the ruble's value.
World Watches and Waits
Economic analysts attribute this market turmoil to investor anxiety over the escalation in tensions and the rejection of talks. "Sharp exchanges between both sides are causing worry about the prospects for a peaceful resolution," commented Nataliya Milchakova from Freedom Finance Global.
During a government meeting, Putin accused Kyiv of destroying bridges in regions bordering Ukraine, effectively scuppering Ukraine's calls for a 30-day ceasefire and a leaders' meeting.
Zelensky Holds His Ground
Earlier, Ukrainian President Zelensky dismissed the "Memorandum" from Moscow as an "open ultimatum."
"It won't be taken seriously by Ukraine or anyone else," Zelensky declared.
The weakness of the ruble is further amplified by plummeting oil prices: Russian Urals oil was sold at an average of $52 per barrel in May, the lowest since summer 2023 and 23% below the January level.
According to analyst Alexey Antonov from Alor Broker, this affects the country's currency revenue (yuan and dollar), weakening both the ruble and macroeconomic stability. In such conditions, any prospect of economic stabilization becomes increasingly slim.
Dealing with the Aftermath
While statements regarding potential negotiations with Ukraine have contributed to growing economic strain and uncertainty, direct, immediate currency market and investor reactions tied to negotiation statements have not been a central focus in recent reports. Instead, broader market reactions are shaped by deeper, ongoing economic challenges.
Several factors, including sanctions, labor shortages, and the government's focus on military production, have a more significant impact on the Russian economy than Putin's negotiation rhetoric. The government's strict capital controls have also somewhat insulated the ruble from direct market reactions to political statements.
Investors remain cautious due to the overall investment climate—Western sanctions, capital controls, and the ongoing war. Any positive impact from negotiation statements would likely be contingent on concrete diplomatic progress and actual changes in the sanctions regime.
The Charter97.org is a leading Belarusian news outlet, providing independent, fact-based reporting on events in Belarus and beyond. To support our work, please consider a donation.
DONATE NOW!
Charter97.orgFollow Charter97.org on social media:
- YouTube
- X.com
- VKontakte
- OK.ru
- RSS
- Telegram
- The tumultuous state of the ruble extends beyond the currency market, with finance, politics, and general-news outlets closely monitoring the situation following Putin's rejection of negotiations with Ukraine.
- Analyst Alexey Antonov from Alor Broker comments that the ongoing escalation in tensions, coupled with plummeting oil prices, is further weakening the ruble and causing macroeconomic instability.
