Investors were preparing on Saturday for more wild gyrations in asset prices after Western nations announced a harsh set of sanctions to punish Russia for its invasion of Ukraine, including blocking some banks from the SWIFT international payments system.
"It means there is going to be a catastrophe on the Russian currency market on Monday," said former Russian Central Bank Deputy Chairman Sergei Aleksashenko. "I think they will stop trading and then the exchange rate will be fixed at an artificial level just like in Soviet times."
Many of those safety moves were at least partially unwound on Thursday and Friday, and U.S. stock markets rallied to close up for the week.The latest measures could send markets on another wild ride, as traders assess the implications for the global economy, including potentially higher commodity prices and inflation. The war between Russia, one of the world’s biggest raw materials’ exporters, and Ukraine has already helped push up oil prices to their highest level since 2014.
"A lot of traders were kind of becoming convinced that the U.S. and Europe were not taking a hard stance,” said Edward Moya, senior market analyst at OANDA. “This action will be really difficult to digest and it will really pick a nerve for a lot of investors. ... A lot of the rebound we saw in the latter half of last week will be tested.”
Tom Martin, senior portfolio manager at Globalt Investments, said the move is going to continue fueling demand for gold, Treasuries and other popular destinations for nervous investors.
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