Thursday, July 17, 2014

Russian Stock Market Hit by Sanctions

The United States imposed its toughest sanctions yet on Moscow on Wednesday, and Russian stocks and the rouble tumbled on Thursday. The rouble-traded MICEX stock market dropped 2.5 percent in early deals, its dollar-traded cousin, the RTS index , fell 3.2 percent, and the rouble dropped as much as 1 percent against the dollar. "From the West's perspective they could not have chosen a better time to intensify sanctions," said Societe Generale strategist Regis Chatellier. "Until a few weeks back, Russia was in a position of relative strength because there was massive pressure on oil but that is not the case any more." The new U.S. sanctions effectively shut off medium and longer-term dollar funding for companies close to Vladimir Putin. The EU also expanded its punishments for certain firms and said it would ask two of its development banks to halt their lending in Russia.

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