Bloomberg
Putin’s response to US sanctions is greater economic isolation
(Bloomberg) – Russian President Vladimir Putin is likely to respond to the latest round of threats to US sanctions, as he has done in the past: accelerating his efforts to make Russia’s economy more self-sufficient. In the seven years since Russia’s annexation of Crimea, Putin’s government and central bank have eliminated the country’s exposure to the dollar, moved US assets and sold less of its debt to foreigners. “Americans say: be careful or we could do more, but Russia is just going to continue on the road to economic self-sufficiency,” said Elina Ribakova, deputy chief economist at the International Finance Institute in Washington. US President Joe Biden’s administration keeps threatening sanctions Russia has warned of “consequences” if imprisoned opposition activist Alexey Navalny dies in prison on Sunday, with Putin’s reaction to the sanctions over the past by increasing Russia’s economic isolation, more than the dollar was first recorded last year after a multi-year attempt to reduce exposure to US assets, the precious metal accounted for 24% of the central bank’s stock at the end of September 2020, the last time the breakdown is available.The share of assets in dollars was 22%, decreasing compared to over 40% in 2018. This trend also appears in the share of Russian international reserves held in the US, which fell to just under 7% by the end of September, down from about 30% before the annexation of Crimea. Most of the change happened in the second quarter of 2018, immediately after the sanctions against the aluminum giant United Co. Rusal, revealed how vulnerable Russia was to sanctions. What our economists say … Russia’s resistance to successive waves of sanctions offers a false sense of security. If the US runs out of options, the next round could be more disruptive, and measures already in place will hinder trade and investment. – Scott Johnson, Bloomberg Economics Of course, there are just so many things Russia can do without interruption. entirely from the global economy. But Washington officials are also aware that if they go too far (as they did with the Rusal sanctions that were later revoked), they risk shaking global markets. trade, Russia has slowly reduced the use of the green dollar in its exports to the European Union, China and India. The euro has almost surpassed the dollar in Russia’s trade with the EU and has already surpassed it in exports to China. Meanwhile, about two-thirds of Russia’s exports to India are paid in rubles. secondary market debt and Russian banks’ access to the financial messaging system used for most international remittances. Russia is already looking for alternatives to the system, known as SWIFT, to make it less vulnerable, although attempts so far have not led to much. One reason the Ministry of Finance wasn’t too worried about the latest public debt sanction is that Russia has largely sold it to local banks at its weekly auctions anyway. Lending increased during the pandemic, even though external demand was weak, which increased the overall size of the market and reduced the share of foreigners. June. Russia is “well positioned” for a short-term market disruption because it has a high cash buffer and demand from local banks is “robust,” Fitch Ratings said in a research note released late Friday. For more articles like this, please visit us at bloomberg.com Subscribe now to stay ahead with the most reliable business news source. © 2021 Bloomberg LP