Did Russian President Vladimir Putin think about the consequences of the Ukraine Crisis? Did he take the decision to attack Ukraine in a hurry? These questions will be answered later. But it is certain that Russia has to pay a heavy price for the attack on Ukraine. On Thursday, the Russian Stock Exchange remained locked for the fourth consecutive day. In today’s time the stock market cannot be imagined to be closed even for a single day (except normal holidays). Trading in the Russian market has come to a standstill for four days.
Russia’s central bank ‘Bank of Russia’ made a statement about this on Wednesday itself. It had said that barring a few exceptions, trading would not take place on the Moscow Exchange on Thursday. It had said that neither derivatives nor stocks would be trading. On February 24, Russia launched an attack on Ukraine. After this, America, Europe and Japan have imposed strict sanctions on Russia.
The effect of sanctions on Russia is starting to show. Russia’s economy is suffering huge losses. Russia’s currency has depreciated significantly. Russia’s currency ruble has fallen 30 percent against the dollar. On the other hand, Russia’s central bank does not have much option left to save the ruble from falling. The reason for this is that many types of restrictions have been imposed on him too. For example, the assets of Russia’s central bank abroad have been frozen.
To handle the situation, the Bank of Russia has doubled the prime interest rate. The objective is to maintain liquidity in the system. Taking a loan has become expensive due to the increase in the interest rate. In the current environment, no one would like to take a loan at double the interest rate. This will not reduce the liquidity in the system much. Russia’s central bank has also barred interest payments to foreign investors investing in bonds.
Russia’s Moscow Stock Exchange has been closed. However, it has not been able to stop trading in Russian companies on other markets including London. Shares of Russian companies have fallen sharply since the attack on Ukraine. The prices of depository receipts of several Russian companies have hit the ground on the London Stock Exchange. From this it can be estimated that how much it has affected the thinking of investors around the world about Russia.
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