Russia’s central bank more than doubled interest rates to 20 per cent to try to protect the collapsing ruble and steady the shaky financial markets as the West’s increasingly tough sanctions began to draw economic blood.
The pre-opening turmoil delayed the opening of the Russia equity markets. The central bank said it would announce later Monday when trading would resume. Russia’s benchmark Moex index has fallen 30 per cent so far in local currency terms.Oil surged again on Monday morning as geopolitical tensions, fueled by Russia putting its nuclear arsenal on high alert and Belarus potentially opening the door to the placement of Russian nuclear weapons on its soil, intensified dramatically.
Russia supplies about 40 per cent of Europe’s imported gas – more so in Germany, which has become dependent on Russian gas in recent years. So far the pipeline deliveries have been exempt from sanctions or counter-sanctions, but that may not last. In a Monday note, Neil Shearing, chief economist in London at Capital Economics, said “the additional sanctions may prompt retaliation from Russia, which could cut energy imports to Western Europe.”“Prices of crude oil and wheat jumped over fears that the sanctions will restrict Russian exports,” RBCM said in a morning note. “There is growing worry that the Western sanctions will eventually hit the energy market too.
Sanctions were threatening to cripple Russia’s economy and financial markets even as pressure piled up on the country from Western investors.