The United States has announced new sanctions against Russia.
Following the Russian invasion and war against Ukraine, the United States and its allies increased sanctions against Russia. The government of the United States had prohibited its banks and corporations from doing business with Russia. On top of that, Russian banks are prohibited and banned from the SWIFT banking system. This has lowered the Russian ruble by more than 16%.
According to Russian economics, this fall is the worst in the history of the Russian currency. The Russian central bank has increased its rates by more than 20% since the start of the invasion. According to Washington DC, the additional sanctions will target the economic wealth of Russia and its next move will be to cripple the Russian central bank. Across the world, multiple European banks have stopped doing transactions from and to Russia, including pay sera and other central banks. The Washington officials added that this sanction was a strategic sanction for two reasons. First, it will put pressure on the Russian government in some senses. Secondly, this sanction will help lower the market’s vitality before it opens. According to the news, Russia’s central bank was attempting to move its assets and if that happens, that could increase the market risks.
It is all risky now, especially for the Dow Jones industrial index, which has lost over 500 basis points last week, and this morning the Dow index fell by 260 points. The S & P index declined this morning by 0.5%. These declines were a direct result of today’s sanctions announcement. Yet, the Nasdaq composite lowered the losses by recording an increase of 0.1% Monday morning.
Energy prices have reached a high record; natural gas is at its highest price since 2014. The same goes for oil and Brent. The crypto market also took serious hits because of the Russian invasion. Last week, BTC had plummeted to $34000, but today it has increased to $41.000 according to the market price.
The market’s vitality is higher than ever. The global economy is barely standing on its two feet, adding to the global inflationary pressure. On top of that, the pressure may increase if Russia and Ukraine don’t make a logical deal.
Investors have low sentiment and have turned their attention to safe assets, which could lower their last week’s losses, or cover some at least. Back to the oil market: currently, the oil market is seeing an increase like never before. The West Texas index rose by 5%, while Brent surged by 5%, reaching $102.
There are some effects on the global market and a rise in commodity prices. The geopolitical tension just transformed into two country wars. According to Biden’s administration, the U.S. and its allies will keep pushing the Russian market to the edge till Putin backs down and retreats.
That makes a compelling case in terms of saving a war problem peacefully, but that could also put the market at greater risk. Russia is the second natural gas provider, and making hard sanctions on it could increase energy prices to higher records than ever seen before.
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