December 5, 2022

Investors are volatile as the West moves to disconnect Russia from Swift

New York / London February 26 (Reuters) – Investors are preparing for a sharp rise in property prices on Saturday, including the blocking of some banks from the Swift International Payments Agency, following the announcement of tough sanctions by the West to punish Russia for its aggression against Ukraine. .

New measures announced by the United States, Britain, Europe and Canada also include restrictions on the international reserves of the Russian Central Bank. These measures will be implemented in the coming days. read more

Investors fear that Russia will expel SWIFT, the world’s leading international tariff network, as this will disrupt world trade and affect Western interests and affect Russia. read more

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“On Monday the Russian currency market is going to be a disaster,” said Sergei Alexashchenko, former deputy chairman of the Russian Central Bank. “I think they will stop trading, and then the exchange rate will be set at an artificial level, just like in the Soviet era.”

Michael Fore, chief executive of Miller & Washington LLC, a financial advisory firm, said of the impact on global markets, “It could come as a surprise if it means a recession in international trade.”

The news comes a week after concerns over the escalating conflict in Ukraine shook markets around the world. Shares plummeted and oil prices soared as investors rushed to the gold, dollar and other safe havens.

Many of those security moves did not hurt a single part on Thursday and Friday, and U.S. stock markets marched to close for the week. read more

Recent measures could send markets into another wild ride as traders assess the impact on the global economy, including higher commodity prices and inflation. The war between Russia and Ukraine, one of the world’s largest exporters of raw materials, has already helped push oil prices to the highest level since 2014.

The S&P 500 has an 8% discount for the year to date, pulled by geopolitical tensions and worries about the worst-case Federal Reserve.

A trader works on the New York Stock Exchange (NYSE) site in New York City, USA on February 18, 2022. REUTERS / Brendan McDermid

“A lot of traders are convinced that the US and Europe are not taking a hard line,” said Edward Moya, OANDA’s senior market analyst. Lots of investors. … Many of the rebounds we saw late last week will be tested. “

Mohammed L-Erian, the Alliance’s part-time chief economic adviser and head of the Grammar Fund’s management, said Russia’s exclusion from the SWIFT could “paralyze the economy there” in detail.

“There will inevitably be leaks and leaks, which will be a stagnant stimulus to the world economy and Russia’s arrears to Western companies and debtors will be high,” he said in an email comment.

Tom Martin, senior portfolio manager at Globalt Investments, said the move would continue to push demand for gold, treasuries and other popular destinations for tense investors.

“SWIFT is going to be painful and the markets are going to recognize it,” he said. “As all the participants are going to adjust their risk tolerance, what you are going to get is continuous volatility.”

One possible accident was the Russian ruble, investors said. Russia’s currency fell to an all – time low against the U.S. dollar last week, although it made up for some of those losses on Friday.

“The ruble will struggle to find a foothold as the central bank faces stricter controls on currency intervention,” said Carl Chamota, Corbyn’s chief market strategist. “No one wants to catch a falling knife.”

Some investors, however, said the markets could put a positive spin on new operations as Western troops do not join the war.

“This is the closest thing to a declaration of war from a financial point of view,” said Rose Telston, a U.S. lawyer and former bank regulator. “It simply came to our notice then that Russia was being targeted by US and EU banks.

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Report by David Barbusia, Ira Iosbashvili, Catherine Beldon, Megan Davis, Zakib Iqbal Ahmed and Michael Price; Editing by Baridosh Bansal, Leslie Adler and Cynthia Asterman

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