Russia’s credit rating has been cut to junk – or below investment grade – by US ratings agency Standard and Poor’s for the first time in a decade.
S&P gave Russia a rating of BB+, which puts it at the same level as Indonesia and Bulgaria.
This makes it harder for Russia to borrow money from investors.
“Russia’s monetary-policy flexibility has become more limited and its economic growth prospects have weakened,” S&P said in a statement.
“We… see a heightened risk that external and fiscal buffers will deteriorate due to rising external pressures and increased government support to the economy,” it added.
Russia’s economy has been in free fall since the middle of last year, when plummeting oil prices cut the income for its oil industry and the unrest in Ukraine led to international sanctions.
Oil prices have plunged over 50% since the middle of last year, to $45 a barrel, which has been particularly difficult for Russia, which expected prices to stay near $100 per barrel in 2015.
Russia’s economy is expected to contract by 4% to 5% this year.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.