Ruble And Russian Stock Market Collapsed After Putin's Statement On Ukraine
2- 5.06.2025, 14:20
- 20,426
The currency market reacted even sharper.
The Russian economy has received a new blow after Putin's statements on the refusal to negotiate with Ukraine: the ruble has staggered, the stock market has recoiled, and investors are frozen in anticipation of a new round of isolation. This is according to The Moscow Times.
Panic sell-off
Russian markets reacted sharply to Putin's speech on Wednesday with a slump. The Kremlin's rhetoric rejecting the possibility of a cease-fire and accusing Ukraine of "terror" triggered a panic sell-off on the stock market. The MosBirch index, which had been rising by 1.3% since morning, lost all of its gains by the close and stopped at 2836.6 points.
The currency market reacted even sharper: the dollar soared by 2.9% to 79.25 rubles in over-the-counter trading. The euro rose to 90.5 rubles and the yuan exchange rate to 11.08 rubles, which means the ruble fell by 1%.
World on pause
Analysts attribute this to investors' nervous reaction to tougher rhetoric and refusal to negotiate. "The sharp mutual statements of the parties raise concerns about the prospects for a peaceful settlement," commented Natalya Milchakova of Freedom Finance Global.
Speaking at a meeting with the government, Putin accused Kiev of undermining bridges in regions bordering Ukraine. The words effectively put an end to Ukraine's calls for a 30-day ceasefire and a face-to-face meeting between the leaders.
A few hours earlier, Ukrainian President Zelensky rejected Moscow's so-called "memorandum," calling it an outright ultimatum.
"It will not be taken seriously by Ukraine or anyone else," Zelensky said.
Financial pressure on the ruble has been exacerbated by falling oil prices, with Russia's Urals selling for an average of $52 a barrel in May. This is the minimum since the summer of 2023 and 23% below the January level.
Alexei Antonov, analyst at Alor Broker Alexei Antonov, said that this affects the country's foreign currency earnings (yuan and dollar), weakening both the ruble and macroeconomic stability. Under such conditions, any prospect of stabilizing the economy is becoming increasingly elusive.
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