Credit agency cuts Russia’s rating again, pushes country to brink of default
The ruble is down 20% against the dollar, trading at $1 to 124 RUB
Eurasia Group President and 'The Power of Crisis' author Ian Bremmer on the most likely economic outcomes of Putin's invasion of Ukraine.
Russia suffered another body blow as its credit rating fell once again, this time hitting the second-lowest rung and putting the country in danger of default.
Rating agency Moody’s set Russia’s rating to Ca, which indicates "severe concerns around Russia's willingness and ability to pay its debt obligations."
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Russia has closed its stock market for a week fears of a sell-off, which would crater the already vulnerable economy. The ruble dropped over 20% in the past week, with $1 equal to 124 RUB. Prior to Russia’s invasion, $1 was equal to 83.53 RUB.
FILE PHOTO: Signage is seen outside the Moody's Corporation headquarters in Manhattan, New York, U.S., November 12, 2021. REUTERS/Andrew Kelly
FILE - Farmers harvest with their combines in a wheat field near the village Tbilisskaya, Russia, July 21, 2021. The Russian tanks and missiles besieging Ukraine also are threatening the food supply and livelihoods of people in Europe, Africa and Asia who rely on the vast, fertile farmlands known as the "breadbasket of the world." Russia and Ukraine combine for about a third of the world’s wheat and barley exports and provide large amounts of corn and cooking oils. (AP Photo/Vitaly Timkiv, File)
The credit rating will further weaken the Russian economy, forcing Russia to turn to any sources it can in order to supplement its economy.
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Putin on Sunday signed a law that allowed his government to seize funds from bank accounts of officials, Reuters reported. The law only allows for seizure if the sum of deposits exceeded declared incomes over three years as proof of "illegal" funds.
And China’s agriculture minister reported over the weekend that the recent winter wheat harvest could be the "worst in history," providing further justification to buy from Russia.
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Minister of Agriculture and Rural Affairs Tang Renjian said rare heavy rainfall last year delayed the planting of about one-third of the normal wheat supply, leading to a roughly 20% shortage in crop yield.
The shortage, coupled with the war between Russia and Ukraine, which together produce roughly 29% of global wheat exports, could see wheat prices surge past the already incredible 14-year high, Reuters reported.
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The shortage could create food security issues for China, driving it to buy wheat from Russia. The two countries worked out a deal on Feb. 24 that allowed China to import wheat from all regions of Russia, which could provide Russia with greater funds for its war and further relief from devastating sanctions on its economy.