Rebound in the Russian stock market, after the collapse of 33% that it registered on Thursday, due to the sanctions imposed by the United States. Yes, Biden has imposed limitations on technology imports, blockades of big banks, and punishments of oligarchs close to Putin. But due to the energy issue, it has gone on tiptoe and Russia has not been removed from the SWIFT system, which enables transfers in dollars and euros to the country. Thus, after being closed for several minutes, the Russian market bounces around 20%.
The banks, once it was known that the harshest punishment that would have been expelled from the international transfer system will not materialize, at least for now, with TSC Group rising 25%. The MOEX index, denominated in rubles, rises 20%.
In fact, the ruble gained 2.3% against the dollar, up to 83.30 united, after hitting a record low of 89.60 in a highly volatile session on Thursday. The currency was supported by the first currency interventions by the Russian Central Bank since 2014, when Russia annexed Crimea from Ukraine.
The market expects more action from the central bank, which has to address inflation risks. The weakening of the ruble after the invasion of Ukraine is expected to dent living standards in Russia and fuel inflation, which is already approaching 9%. Interest rates in the country stand at 9.5%, after rates were raised by one percentage point in the middle of this month.
Russia could now carry out an unplanned interest rate hike as it did in late 2014, when it raised its key interest rate to 17% from 10.5% late overnight amid the ruble’s slide. analysts say. “We believe that a punctual increase of 400 basis points or more by the BCR of 400 basis points or more is likely, with a key interest rate above 13%,” Morgan Stanley explains in a note.