Russian ruble on track for worst close in 2 years as US ramps up sanctions

Russian
President Vladimir Putin answer questions during a joint press
conference with U.S. President Donald Trump after their summit on
July 16, 2018 in Helsinki, Finland.
Chris McGrath/Getty Images

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The Russian
ruble was on track for its lowest close in more than two
years Wednesday as Washington ramped up sanctions on
Moscow. 

The ruble was down 1% to 67.90 per US dollar after the Treasury
Department blacklisted a
set of Russian companies, entities, and individuals accused of
helping North Korea evade international sanctions.

Under United Nations and US sanctions against North Korea, meant
to penalize Pyongyang for continuing to develop its nuclear
weapons program, the country is barred from trading oil and other
commodities. 

In two separate actions Tuesday, the Treasury imposed sanctions
on several Russian companies, six vessels and two individuals
involved in efforts to undermine those.

Earlier US sanctions
punishing the Kremlin for its role in the poisoning of a
former Russian spy in Britain took effect Wednesday. When those
were announced earlier this month, the State Department added
another round of penalties could be imposed in 90 days if Russia
does not meet a list of demands.

“We think the direct impact of these new restrictions on the
Russian economy will be modest as most of national security goods
exports were already banned by the Obama administration,” HSBC
economist Artem Biryukov said. “Even the second wave, if
realised, should have a limited impact on GDP growth and balance
of payments.”

But as Congress considers rolling out its own round of sanctions
against Russia, which could include restrictions on
dollar settlements for Russian banks and purchases of
Russian debt issues, Biryukov said the country could start to
feel the pain of economic penalties. 

“The imposition of such sanctions could have significant economic
effects, as it could impact capital flows and the ability of
Russia and Russian entities to borrow in the international
capital markets,” he said.

As Moscow faces mounting accusations of continued attempts to
influence the upcoming midterm elections, analysts see an
increasing chance of those sanctions being imposed. 

Microsoft said Tuesday it had
stopped hackers with ties to the Russian government from
targeting US political groups. Facebook, which was at the center
of what Washington condemned as Russian interference in the 2016
campaign, also said it had
removed hundreds of accounts tied to similar disinformation
campaigns.

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