Russia cannot ignore power of the markets

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One thing stands immune to Russian military power, and that is the international markets, which pronounced their verdict on the rising tensions in Ukraine on Monday by selling off the rouble and Russian stocks.

The Russian currency fell to its lowest level in three weeks, and shares also lost ground as investors feared a fresh round of economic sanctions would hurt the economy.

“Today with the background of the geopolitical situation and heightening tensions we see a fall on the stock market of both the rouble and the dollar indicators. The fall of the rouble index is more than one percent, the fall of the dollar index is up to two percent,” says the Moscow Exchange’s Nikita Bekasov.

Annual inflation stood at 6.9% in March and the rouble has weakened all year, quickening after the Crimea crisis. Food price inflation is running at over 8%.

“It is of course related to the political situation, to the current situation in Ukraine. And how does that impact on us, ordinary people? Prices will rise, salaries will remain the same, nothing new,” says one Moscow resident.

Inflation is showing signs of quickening, too, so Russian consumers can expect a rough ride for the time being, although some investors are starting to speculate that Russian shares will soon look too cheap to resist.

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