Ukraine Crisis: Russian Stocks Plunge 45%, Wipes Out $250 Billion In Value

Russian assets also nosedived on the back of military operations, prompting emergency central bank action and investors braced for more toughest round of Western sanctions

 New Delhi: Russia’s military actions against Ukraine have resulted in market crash in Russia, wiping out as much as $259 billion in stock-market value, news agency Bloomberg reported.

The Russian assets also nosedived on the back of military operations, prompting emergency central bank action and investors braced for more toughest round of Western sanctions. The ruble plunged to a record low, the cost of insuring Russian debt against default soared to the highest since 2009, and stocks collapsed as much as 45 per cent, their biggest-ever retreat.

The military attacks on Ukraine cast a shadow over global markets and sparked a fresh bout of risk aversion. Russian assets took the main blow after President Vladimir Putin ordered an operation to “demilitarise” Russia’s neighbour, prompting global condemnation and a US threat of further “severe sanctions” on Moscow.

The Bank of Russia said it will intervene in the foreign exchange (FOREX) market for the first time in years and take necessary measures to tame volatility. 

Viktor Szabo, an investor at Aberdeen Asset Management in London, told Bloomberg, “The ball is now on the West’s side, we have to see how far sanctions go, whether Russia will be kept in the global financial system.”

The Russian central bank made no mention of raising interest rates, but said it will provide additional liquidity to banks by offering 1 trillion rubles ($11.5 billion) in an overnight repo auction. Policy makers have increased the benchmark rate by 525 basis points in the past 12 months to tame inflation.

Commerzbank AG strategist Ulrich Leuchtmann said, “Significant overshooting is possible, and the dollar-ruble at 100 certainly is well in range. I don’t think that interventions will be the main instrument of choice. They can only prevent extreme overshooting. Rate hikes have to follow soon.”

Stocks and the ruble pared some losses in early afternoon trading in Moscow. After declining as much as 9.4 per cent the ruble was down 3.6 per cent at 84.2250 as of 12:59 pm. The country's sovereign bonds plummeted, taking some to distressed levels, and the nation's credit-default swap premium soared above 750. 

So far, the response by the Russian central bank is more measured than eight years ago when the conflict in Ukraine first flared.