The probability that the conflict between Ukraine and Russia resolved with a military intervention is trading on the rise. A growing fear that the Moscow Stock Exchange respond downward. And with virulence. With falls of 10.5%, the reference MOEX index of the Moscow floor, has signed up this Monday his worst session of the last eight years.
You have to go back to March 2014, in full annexation of Crimea by Russia, to see a bigger drop than this Monday in the MOEX. So, with Russian troops entering the Ukrainian Maritime Province, the punishment was only slightly higher – 10.79%. Now that everything points to a similar outcome for Donbas, history repeats itself.
Although in the early hours everything pointed to a more peaceful scenario thanks to the possibility of a high-level meeting between the president of the United States, Joe Biden, and his Russian counterpart, Vladimir Putin, the absence of comments on the matter by the Kremlin gave the back to the markets. In its place, from Moscow has slipped the idea of officially recognize self-proclaimed separatist governments and pro-Russians from Donetsk and Luhansk oblasts.
In both regions, the emergency evacuation of the civilian population before what could be to come. Of course, to Russian territory. Since then, the accusations of violation of the ceasefire and the use of false flags in some skirmishes have not ceased and have continued to heat up the pre-war atmosphere on Europe’s eastern border.
The withdrawal of investment positions in the Russian markets was due, more than to the current or future military situation, to the anticipation that any movement would result in international sanctions that will harm the economy of the Eurasian country. This is highlighted by analysts, who consider that it will be these more than weapons that can hinder post-pandemic recovery in Europe as well.
Blow to the ruble
In this sense, the ruble also fell sharply in the foreign exchange market. The euro improved its exchange rate against the Russian currency by 2.8%, up to 89.49 rubles. For its part, the dollar strengthened 2.6% against the Russian currency.
As a result of this gap, the stock index RTS, denominated in euros and more followed by foreign investors on the Moscow Stock Exchange, increased its decline to 13.21%. However, in the crosses with the greatest selling panic, falls of more than 17% were recorded.
In so far this year, MOEX loses more than 20% of its capitalization and this Monday more than 350 points were left in one fell swoop, until setting a last price at 3,036.88 points.