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Moodys Warns Ukraine Crisis Could Affect Russia's Credit Rating
6.03.2014 12:39
Moodys Warns Ukraine Crisis Could Affect Russia's Credit Rating
Photo Credit: http://uz24.uz

Moody’s has warned Russia could lose investment appeal and its current credit rating due to the uncertainty over the Ukraine crisis.

      According to the rating agency, Russia’s GDP can suffer as a result, with many private investors withdrawing their funds from the economy. The risk is exacerbated by the fact that many Russian banks and companies operate in Ukraine.

      Earlier, Russia-IC reported that a military invasion of Crimea would cost the Russian economy some three percent of GDP.

      The transit of natural gas to European consumers worth $30 billion may be disrupted, the Vedomosti business daily quoted an estimate by Bank of America Merrill Lynch.

      In case of a military operation, the EU may block the construction of the South Stream pipeline and switch to other energy sources in a move towards an economic boycott.

      Public spending is bound to go up regardless of whether the Kremlin decided to send the troops to the Crimean peninsula.

      The Russian authorities have pledged financial aid to the residents of the autonomy whose budget is facing a $1 billion deficit.

      According to Vedomosti, Russia’s 2013 GDP totaled 66.689 trillion roubles.

      The events in Ukraine have sent the Russian stock market and national currency in free fall, with the biggest blue chips like Sberbank or Gazprom shrinking by an average of 15-23 percent on Monday.

      The tough international response over Russia’s intentions in Crimea triggered a massive sale of Russian stocks. Throughout the day, the Moscow Stock Exchange suspended trading in the stocks of Mostotrest, FSK UES, Rosseti, MOESK, Kamaz, Mechel, Irkutskenergo after they devalued by more than 20 percent.

      According to the Exchange, the volume on the foreign exchange section broke the $42 billion threshold, double the February average of $22-23 billion. The Central Bank is forced to resort to mass injections to keep the national currency afloat.

       




Author: Mikhail Vesely

Tags: Russia economy Ukraine crisie    

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