The Russian ruble sank today following Friday’s announcement from Moody’s about a downgrade of Russia’s credit rating due to the damage that sanctions from the United States and the European Union have done to the already fragile Russian economy.
Moody’s Investor Service announced on October 17 that it downgrades Russia’s sovereign credit rating to Baa2 from Baa1. The rating agency cited following reasons for the decision:
1) Russia’s increasingly subdued medium-term growth prospects, exacerbated by the prolongation of the Ukraine crisis, including through the impact of expanded international sanctions.
2) The gradual, but ongoing erosion of the country’s foreign-exchange buffers due to capital flight, Russian borrowers’ restricted international market access and low oil prices.
Russia is spending its foreign-currency reserves in an attempt to buoy the ruble but is unsuccessful so far.
USD/RUB climbed from 40.6800 to 40.9578 as of 17:04 GMT today.
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