Russia attacks Ukraine. Financial consequences.

Russia attacks Ukraine

On February 24, 2022, Russia launched a major invasion of Ukraine from three directions (north, east, south) on land and also began air attacks. In less than 24 hours, dozens of targets were hit. As a result, new sanctions are being imposed on Russia, and financial-market participants are showing a negative reaction.

Financial consequences

Banking sector

Russian state banks have begun to have their access to international banking operating systems closed. Transfer operations through SWIFT may be blocked for Russia. At the moment, several countries such as Germany, Hungary, Italy, and Cyprus do not agree with this measure.

Capital market

Yesterday, the Russian stock market was not even red. Its color was certainly not a healthy one. Shares of the largest Russian companies fell by 40-50 percent, and some by more than 60 percent.

Russia's stock indices

About 6-7 years of growth in Russia's capital market were "erased in a few days". Since November 2021, declines began in the usual way for markets, but this week Russian indices RTS and MOEX collapsed.

Investor losses

Yesterday's decline in the Russian capital market generated losses of about 250 billion dollars for its investors.

At one point, the Bank of Russia banned sell transactions on its financial market.

If we analyze it in dollars (as it is quoted), then the Russian RTS index returned to 2004.

USD/RUB

Yesterday, the Russian ruble depreciated by almost 10%. The USD/RUB quote rose sharply, from 81 to 88.

Thus, the previous high (81 RUB) from 2020 was broken upward, but it is premature to talk about breaking the historical high from 2016, at the price of 85 RUB.

In the next image, two more of the largest depreciations of the Russian ruble over the last 27 years can be seen. Following the sanctions imposed after the seizure of Crimea, the ruble's devaluation measured approximately 100%. We will watch where it goes now, depending on how deep into Ukraine Russia goes this time. 

EUR/RUB

Against the euro, the ruble also depreciated yesterday by about 10%. The EUR/RUB chart rose from 91 to 100 and managed to break its historical high, so we may see more confident depreciation ahead. Still, we are not rushing decisions yet, because technically, on the Weekly chart, the breakout still cannot be qualified as a real one, since the week has not yet closed, and at the moment the price has recovered a little and is right at the historical-high zone. We will see how today's day closes.

Crypto market

Cryptocurrencies also fell in unison in the morning by about 10-15%. Thus, many leveraged buyers were "closed out", totaling about 500 billion dollars.
But by evening, to everyone's surprise, the crypto market recovered practically the entire decline. 

Gold

The same happened with gold. First it recorded a rise, as was logical for a safe-haven asset, but by evening it fell. Strange... it behaved as if by evening the end of the war had been announced. 
Over the long term, measured in years, we still expect #GOLD to rise greatly and confidently in price, as we mentioned in the post about gold, back in July 2019.

Let us stay strong!
We inform ourselves correctly and act appropriately!

Follow the evolution of financial assets online 

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Risk warning: This article is for information and education only, reflects the situation as of its publication date and does not constitute investment advice, an offer or a recommendation to buy or sell any financial instrument. Trading leveraged instruments (Forex, CFDs) and crypto-assets carries a high risk of losing your capital. Past performance does not guarantee future results. Before investing, assess your objectives and risk tolerance and, if needed, consult a licensed adviser. Details: Disclaimer & Risk Warning.