Russian media published the full text of a U.S. bill seeking “crushing sanctions” for election meddling, sending the ruble to its weakest level since fall 2016 and plunging Russian stocks and bonds, Finanz.ru reports.
The Russian currency slipped 2 percent to 64.7425 per dollar on Wednesday, breaking out of a range it’s traded in since April, after business newspaper Kommersant posted the full text of the draft introduced last week by a bipartisan group of legislators. The bill includes proposals to sanction Russia’s new sovereign debt and banking transactions.
The euro added 1.54 rubles and for the first time since May it exceeded 75 rubles.
“The falling ruble is also result of foreign investors’ exit from Russian financial assets,” says Kirill Tremasov, director of the analytical department at Loko-Invest.
The Russian national debt market collapsed to its lowest for the year by the RGBI index (138.02 points), while the yields of individual issues exceeded 8% per annum.
The price of 9-year OFZ 26207 fell 101.7% of its nominal value, having issued a minimum since the spring of 2017. Next, sovereign Eurobonds fell: the price of Russia-42 securities fell by 114 basis points, to 104.06% of the nominal, and the yield reached 5.32% per annum.
“The market is almost 100% sure that sanctions against the public debt are coming in months,” says Danske Bank strategist Vladimir Miklashevsky: non-residents prefer not to wait for the adoption of the law, but to act ahead of schedule, he says.
According to the Central Bank, since April foreign investors have already withdrawn $6.7 billion from federal loan bonds, but as of July 1 they still held more than 1.8 trillion rubles ($28 billion).