US-EU Sanctions to Increase if Ukrainian Elections Disturbed

President Obama and German Chancellor Angela Merkel say they are ready to impose sanctions aimed at sectors of the fragile Russian economy if Moscow’s actions impede Ukrainian elections scheduled for May 25.

The United States and European Union have already targeted Russian officials with sanctions for annexing Crimea, and for stirring up separatist tensions in eastern Ukraine, where violence has escalated. The U.S. has also moved to freeze the assets of 18 Russian companies.

But neither Washington nor Berlin have moved yet to disrupt trade with Russia. Exports of energy and commodities — the mainstay of Russia’s $2 trillion economy — are unaffected and financial sanctions have been limited to small banking groups.

Still, the risk of an escalation in the Ukraine crisis and tougher sanctions has raised uncertainty in the minds of investors, helping to fuel a flight of capital that has tipped the world’s 8th largest economy into recession.

The ruble has fallen about 9% so far this year, and Russia’s benchmark stock index is down 13%. Both have steadied slightly since hitting lows in mid March — before the West unveiled its sanctions.

via CNN

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza