2022/02/24 (009) Column

Oh my God – I can`t imagine it – Russia Launches Military Operations!
How the western political democratic leaders will react about it?
Brent Oil hits 100 USD, Russian Ruble hits all-time low,
Gold hits 18-month high & DXY hits 20-month hih &…


Brent Hits $100 as Russia Launches Military Operation

Brent crude futures hit $100 per barrel for the first time since September 2014 on Thursday, after president Vladimir Putin announced that Russia would launch a military operation in Ukraine, with explosions being reported in Kyiv. Putin claimed that Russia’s goal was not to occupy Ukraine, but merely to protect residents of eastern Ukraine from what he called a regime, and warned other countries that any attempt to interfere with the Russian action would lead to “consequences they have never seen,” according to Reuters. Markets have been wary of escalating tensions in Eastern Europe for weeks now, amid fears that a major conflict could disrupt energy flows and provoke crippling sanctions. Meanwhile, investors are also closely monitoring the Iran nuclear talks amid signs of progress, as a potential deal could add more than 1 million barrels a day of supply and help ease a tight global market.

Russian Ruble Hits All-time Low

USDRUB touched an all-time low of 86, in an anticipation of tough sanctions from the West after Russian President Vladimir Putin launched military action on Ukraine, as explosions were heard in Kyiv and Donetsk early Thursday. The US took measures against banks and prohibited participation on the secondary market for Russian sovereign debt, while Germany halted the certification of the Nord Stream 2 pipeline. Harsher sanctions could also be imposedshould Russian forces move further west from the Donbas. Meanwhile, the Central Bank of Russia remains unsure of when to resume foreign exchange purchases due to the ruble’s increased volatility. On its February 11th meeting, the CBR hiked its benchmark rate by 100bps to a five-year high of 9.5%, as widely expected, while signalling further hikes could take place in the next meetings.

Russian Stocks Close at Over 4-Year Low

The ruble-backed MOEX Russia Index plunged as much as 45% before closing 33.3% lower at a 4-year low of 2,058 on Thursday, after Russia launched a full-fledged invasion against Ukraine. Russian forces breached the Ukrainian border through land, sea, and air amid reports of shelling in multiple Ukrainian cities, including the capital Kyiv. Western states announced harsher sanctions are to be imposed as retaliations, while US President Biden promised further measures to hit Russia’s economy. Financial shares, the most exposed to sanctions, fell over 35%, led by Sberbank (-48%) and VTB Bank (-43%), prompting the Central Bank of Russia to ramp up liquidity measures with emergency interventions. State-backed giant Gazprom (-40.5%) also plunged on the threat of sanctions.Gold Hits 18-Month High

Gold broke through $1,970 on Thursday, a level not seen since September 2020, as safe-haven demand for the metal jumped after President Putin launched a military operation in Ukraine. Putin warned other countries that any attempt to interfere with the Russian action would lead to “consequences they have never seen.” Meanwhile, investors are also kept an eye on accelerating inflation and ensuing rate hikes from the Federal Reserve. Fed governor Michelle Bowman said she would assess incoming data to decide whether a half percentage point increase at the March meeting is needed.DXY Hits 20-Month High

The dollar index appreciated past 97 on Thursday, its strongest level since June 2020 on run for safe-haven assets after Russia has launched an invasion of Ukraine. Russian forces are attacking several locations across Ukraine with President Putin warning other countries that any attempt to interfere with the Russian action would lead to “consequences they have never seen.”. Meanwhile, investors are also keeping an eye on accelerating inflation and ensuing rate hikes from the Federal Reserve, after Fed governor Michelle Bowman said Monday that she will assess incoming data in deciding whether a half percentage point rate increase at the March meeting is needed.