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17 Mar 2014
Crimea to formally join Russia against international opposition
FXStreet (Łódź) - As widely expected, Crimea's residents, who went to the polls on Sunday to determine the future of the peninsula, decided that it should leave Ukraine and become part of the Russian Federation. A staggering 95.5% of the voters among the two million population, 58 percent of whom are ethnic Russians, were in favor of returning under Moscow's rule. The turnout at the referendum was rather high at 70%.
The West preparing more sanctions against Russia
The EU warned at the end of last week that sanctions against Russia, including travel bans and asset freezes on an initial list of 120-130 people in Crimea and Russia who “threaten the territorial integrity” of Ukraine, would be imposed today if the referendum was carried out against international opposition. US President Barack Obama told Vladimir Putin on Sunday that he considered the vote illegal and that the US would not recognize its outcome and implement visa bans on a number of Russians and Ukrainians.
High Representative of the European Union for Foreign Affairs and Security Policy Catherine Ashton urged Moscow on Monday to hold talks with the authorities in Kiev, as the current situation is “deeply worrying” and should be resolved quickly. It is expected that more trade sanctions will be agreed later this week by European officials at the upcoming EU summit, if Russia continues its actions against Ukraine.
Russia's parliament's Deputy Speaker announced early on Monday that the Duma, the lower house of Russia's parliament, was preparing to pass legislation allowing Crimea to become a subject of the Russian Federation, “the very near future.” Meanwhile, Crimea's authorities have already formally applied to join Russia and said that Ukrainian military units stationed in the region would be disbanded.
Possibility of further military action in eastern Ukraine
Right now the focus is on what will the West and Russia do in the aftermath of the referendum. Many expect Russia to continue its expansion in eastern Ukraine, after Russian troops had taken control of a gas station in the Ukrainian village of Strilkove for a few hours on Sunday and incited violent pro-Russian protests in Donetsk and Kharkiv. Moscow has also been gradually strengthening its military presence in Crimea, with 22.000 Russian troops stationed there currently. On Sunday the defense ministries of and RussiaUkraine announced a truce in Crimea which is to last until Friday.
Market reaction to Crimea vote fairly calm
The markets have been calm for now and as to Kit Juckes from Société Générale comments: “The limited reaction in Euro crosses vs liquid CEE currencies (EUR/PLN, EUR/HUF etc) reflects this wait and see mood while the Rouble has now weakened by over 10% against both USD and EUR this year.”
Meanwhile, after massive a drop in custodial holdings of US treasuries owned by other central banks noted last week, it is suspected that “the Russia central bank may have moved its holdings of US treasuries in order to make them out of the reach of any potential sanctions,” according to Jane Foley, Senior Currency Strategist at Rabobank.
“While there is speculation that any sanctions will be fairly moderate; at least initially, there is clearly a risk that tensions surrounding events in the Ukraine could increase volatility in the market in the coming sessions.”
The West preparing more sanctions against Russia
The EU warned at the end of last week that sanctions against Russia, including travel bans and asset freezes on an initial list of 120-130 people in Crimea and Russia who “threaten the territorial integrity” of Ukraine, would be imposed today if the referendum was carried out against international opposition. US President Barack Obama told Vladimir Putin on Sunday that he considered the vote illegal and that the US would not recognize its outcome and implement visa bans on a number of Russians and Ukrainians.
High Representative of the European Union for Foreign Affairs and Security Policy Catherine Ashton urged Moscow on Monday to hold talks with the authorities in Kiev, as the current situation is “deeply worrying” and should be resolved quickly. It is expected that more trade sanctions will be agreed later this week by European officials at the upcoming EU summit, if Russia continues its actions against Ukraine.
Russia's parliament's Deputy Speaker announced early on Monday that the Duma, the lower house of Russia's parliament, was preparing to pass legislation allowing Crimea to become a subject of the Russian Federation, “the very near future.” Meanwhile, Crimea's authorities have already formally applied to join Russia and said that Ukrainian military units stationed in the region would be disbanded.
Possibility of further military action in eastern Ukraine
Right now the focus is on what will the West and Russia do in the aftermath of the referendum. Many expect Russia to continue its expansion in eastern Ukraine, after Russian troops had taken control of a gas station in the Ukrainian village of Strilkove for a few hours on Sunday and incited violent pro-Russian protests in Donetsk and Kharkiv. Moscow has also been gradually strengthening its military presence in Crimea, with 22.000 Russian troops stationed there currently. On Sunday the defense ministries of and RussiaUkraine announced a truce in Crimea which is to last until Friday.
Market reaction to Crimea vote fairly calm
The markets have been calm for now and as to Kit Juckes from Société Générale comments: “The limited reaction in Euro crosses vs liquid CEE currencies (EUR/PLN, EUR/HUF etc) reflects this wait and see mood while the Rouble has now weakened by over 10% against both USD and EUR this year.”
Meanwhile, after massive a drop in custodial holdings of US treasuries owned by other central banks noted last week, it is suspected that “the Russia central bank may have moved its holdings of US treasuries in order to make them out of the reach of any potential sanctions,” according to Jane Foley, Senior Currency Strategist at Rabobank.
“While there is speculation that any sanctions will be fairly moderate; at least initially, there is clearly a risk that tensions surrounding events in the Ukraine could increase volatility in the market in the coming sessions.”