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9 Aug, 2018 12:47

US sanctions threat hammering the ruble to multi-month lows

US sanctions threat hammering the ruble to multi-month lows

The Russian currency is slipping on Thursday after Washington proposed the latest round of anti-Russian sanctions. The ruble has hit the lowest level against the US dollar in nearly two years.

The US government is considering a broadened ban on dollar transactions by Russian lenders and operations with Russia's newly-issued sovereign bonds.

The latest punitive measures are being considered in response to Russia’s alleged involvement in the nerve agent attack on former double agent Sergei Skripal and his daughter Yulia in the UK. The Russian government has repeatedly denied involvement and has called for an open investigation.

The news sent the Russian currency falling to 66.48 against the dollar, its weakest since November 2016.

The dollar-denominated RTS, an index of 50 Russian stocks traded on the Moscow Exchange, was down 2.14 percent at 11:15 GMT, with financials and industrials facing the hardest hit so far. Both have declined by over 2.6 percent.

According to the US State Department, the sanctions targeting Russian exports of electronics and other national security-controlled equipment will come into effect around August 22.

The decision was reportedly based on the assumption that Moscow broke a 1991 international law against chemical and biological warfare. The Kremlin has repeatedly denied the allegations, while the UK authorities have provided no proof of Russia’s involvement in the case.

The next round of US sanctions may reportedly include further decline in diplomatic ties between the countries, a ban on flights of Russia's Aeroflot airlines to the US and almost a complete suspension of US exports to Russia.

Aeroflot stock has dropped four percent, while state bank VTB declined by 3.9 percent.

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