Ruble heads towards 20-month slump as ‘US bill’ jolts Russia

Bloomberg

The ruble headed for its weakest closing level since November 2016 and Russian stocks and bonds plunged after local media published the full text of a US bill seeking “crushing sanctions” for election meddling.
The currency slid 2.2 percent to 64.91 per dollar on Wednesday, sinking the most among major peers and breaking out of a range it’s traded in since April, after Russia’s Kommersant newspaper posted the draft introduced last week by a bipartisan group of legislators.
The bill includes proposals to sanction new sovereign debt and block dollar transactions of the nation’s biggest lenders.
“The Kommersant publication was the straw that broke the camel’s back,” said Denis Davydov, an analyst at Nordea Bank in Moscow. “It’s important to be able to read and assess the actual bill.”
No action will be taken on the draft until the House is back from summer recess in September, leaving room for more market jitters through the end of the month.
But with President Donald Trump calling for closer ties with Russia, and the US Treasury warning earlier this year against sanctioning the sovereign debt market, it’s uncertain the bill will make it into law.
Traders are particularly concerned by a clause that calls for prohibiting “all transactions in all property and interests in property” of some of the country’s largest lenders.
Sberbank, VTB Bank, Gazprombank, Promsvyazbank, Rosselkhozbank and Vnesheconombank are listed. The draft also includes Bank of Moscow, which was merged into VTB in 2016, while Vnesheconombank is listed twice in the text, without explanation.
The bill also seeks penalties on energy projects and a survey of President Vladimir Putin’s net worth.
It follows reports of Russia’s ongoing efforts to sway US elections, new efforts to hack US senators, and intelligence agencies’ conclusion that Russia sought to meddle in the 2016 presidential election.