Russian Debt Downgrade Will Not Help Peace Talks

Fitch Ratings on Friday downgraded Russia’s long-term foreign and local currency issuer default ratings to BBB- from BBB, citing sharp falls in oil prices and the ruble. Its outlook on the long-term IDRs is negative.

The ratings agency also downgraded the country’s senior unsecured foreign and local currency bonds to BBB- from BBB.

“The economic outlook has deteriorated significantly since mid-2014 following sharp falls in the oil price and the ruble, coupled with a steep rise in interest rates,” Fitch said in a statement.

“Western sanctions first imposed in March 2014 continue to weigh on the economy by blocking Russian banks’ and corporates’ access to external capital markets.”
Oil, Russia’s main export, lost more than 50 percent of its value in 2014. Brent posted its seventh sreait weekly loss on Friday wand were trading near their lowest level since April 2009.

Russia imposed steep interest rate hikes last year in an effort to stem a run on the currency.

However, the decision failed to strengthen the struggling currency. The ruble has fallen some 85 percent versus the dollar since the beginning of last year.

via CNBC

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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