Strongly worded statements, threats of travel restrictions, and summit no-shows. So far, these are the relatively mild diplomatic implications for Russia of its incursion into Ukraine, as few in the West can stomach an open military confrontation with Moscow over its apparent occupation of Crimea.
But the markets are punishing Russia much more swiftly than the diplomats. A wide range of Russian assets—stocks, bonds, and the ruble—plunged in value today. To shore up the ruble, which is plumbing record depths, Russia’s central bank unexpectedly hiked interest rates today. It ratcheted up the benchmark one-week rate from 5.5% to 7%, and traders report that the central bank has also been spending billions of dollars in currency markets to stem the fall in the value of the ruble.
The two main Moscow stock markets, the Micex and the RTS, have fallen by more than 10% at the time of writing, in a broad-based selloff. Big Russian companies like Gazprom and Sberbank saw their share prices plunge as traders dumped their shares.