The morning of the invasion, the Russian stock market tanked by almost 50% after a continuous downward movement since October. The market has been ugly everywhere, but this was different. But it is nothing compared to what will happen if SWIFT exclusion is enacted. That would mean that international electronic transactions would effectively cease from one moment to the other, killing all significant trade activity, and likely cause a bank run by people trying to get their money, possibly in foreign currency.
The Central Bank of Russia will likely not be able to prevent this. The Russian government will not be able or even unwilling to honor its foreign currency obligations. It will be interesting to see what MOEX does on Monday, but I doubt it will be pretty.
Create another rating BELOW junk called Russia.
US financial institutions are barred from transacting in new Russian debt. This will not only depress demand, but make underwriting new issuances much more difficult. Being junk will definitely not help either.
Their debt is tiny and reserves huge, so that won’t cause any noticeable pain for Russia. At just not in short term.
Note that Polish PM was the one who started to publicly call out rating agencies to cut Russian ratings
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And all this just because of Putin’s small junk.
The morning of the invasion, the Russian stock market tanked by almost 50% after a continuous downward movement since October. The market has been ugly everywhere, but this was different. But it is nothing compared to what will happen if SWIFT exclusion is enacted. That would mean that international electronic transactions would effectively cease from one moment to the other, killing all significant trade activity, and likely cause a bank run by people trying to get their money, possibly in foreign currency.
The Central Bank of Russia will likely not be able to prevent this. The Russian government will not be able or even unwilling to honor its foreign currency obligations. It will be interesting to see what MOEX does on Monday, but I doubt it will be pretty.
Create another rating BELOW junk called Russia.
US financial institutions are barred from transacting in new Russian debt. This will not only depress demand, but make underwriting new issuances much more difficult. Being junk will definitely not help either.
Their debt is tiny and reserves huge, so that won’t cause any noticeable pain for Russia. At just not in short term.
Note that Polish PM was the one who started to publicly call out rating agencies to cut Russian ratings