Russia's military invasion of Ukraine deepens turmoil.
Stock prices, bonds, crude oil, wheat, gold, and the entire market were shaken every time the trend was reported.
On the other hand, Western countries and Japan are issuing economic sanctions one after another in order to stop the invasion.
Among them, financial sanctions through money are strong.
Which method can do financial damage to Russia, increase the momentum of anti-war from the public, and turn Putin into a turn?
(Neil Kato, Reporter, Ministry of Economic Affairs)
Financial sanctions on Russia
The situation in Ukraine is becoming more and more intense as Russia's military invasion increases day by day.
Information that a nuclear power plant in the southeastern part of Ukraine was attacked by Russian troops jumped in on the morning of Friday, March 4, Japan time, the market became turbulent, and the Nikkei Stock Average temporarily dropped by more than 800 yen. ..
Western countries and Japan are issuing financial sanctions one after another.
Of particular note was the removal of certain Russian banks from the international payment network SWIFT.
However, market officials point out that this financial sanction is meaningful as a “matching technique” with the asset freeze of the Central Bank of Russia.
Ruble plunge
This chart shows the price movements of the Russian currency, the ruble.
The higher the wave, the cheaper the ruble.
On Thursday, February 24, Japan time, when the military invasion began, the transaction was in the $ 1 = 80 rubles range.
However, sanctions on the SWIFT and the central bank were announced on Sunday morning, and on Monday, the 28th of the week, the ruble plummeted to around 115 rubles per dollar.
The SWIFT is an important infrastructure used for remittances such as trade, and exclusion from it effectively means leaving the world economy.
However, in reality, certain "loopholes" were prepared, such as the largest Sberbank and the group banks of the government-affiliated gas company Gazprom were not included in the target.
Locking out all banks would come at a higher price, especially for Europe, which relies heavily on Russia for much of its natural gas.
Central bank asset freezes, on the other hand, are seen as much stronger.
To prevent currency depreciation when economic sanctions are imposed, there is a foreign exchange intervention known as the treasure sword of the ancestors.
Central banks need to sell foreign currencies such as dollars and euros to buy and support the ruble, and this sanction is a way to freeze this foreign currency.
It is believed that the aim of Europe and the United States is to depreciate the currency and ruble by binding the limbs of the Russian central bank.
A long line at an ATM
A strategy of currency depreciation set by the Western side.
Russian citizens are directly affected.
There is a long line at ATMs for fear of cash shortage.
In addition, if import prices rise sharply due to a currency plunge, the prices of personal items will rise, leading to inflation.
Countermeasures (1) Unique payment network
Russia, on the other hand, has prepared a number of countermeasures based on past experience.
It is said to be a lesson from the economic sanctions received during the 2014 Crimean annexation.
One of the countermeasures is the development of a Russian-made payment network to replace SWIFT.
An alternative system called SPFS, used by banks in Russia.
However, there is no international spread, and the situation is far from being an alternative to SWIFT.
Countermeasures (2) Breaking away from dollar dependence
Another countermeasure is to break away from dollar dependence.
Until about five years ago, the US dollar accounted for about 40% of foreign exchange reserves, according to the Central Bank of Russia.
This has decreased to 16% as of 2021.
On the contrary, gold (22%), which is called a stateless currency, increased.
And the Chinese yuan (13%).
In particular, gold can be earned in foreign currency as soon as it is sold in the trading market.
However, despite the gold and yuan, the freeze on dollar assets seems to have been quite effective.
Russia has been striking a sharp rise in the policy rate.
With a strong rate hike from 9.5% to 20%, we are taking a pretending response, such as asking domestic trade-related companies to sell 80% of the foreign currency earned after January this year. ..
The West Moves To Freeze Assets Of Millionaires
The next financial sanctions imposed by Western countries against this is the asset freeze of millionaires who have a honeymoon relationship with the Putin administration called "Oligarch".
By freezing their assets, including luxury yachts, condominiums, and private jets, the aim is to get people around Putin to complain.
Against this backdrop, on Thursday, March 3, Russian oil giant Lukoil issued an unusual statement condemning the invasion of Ukraine.
On the same day, the US rating agency Moody's announced that it had lowered the rating of Russian long-term government bonds by six levels at once to the speculative "B3".
"It is very likely that Russia will not be able to maintain its debt repayment capacity due to sanctions," he said, creating a situation that could lead to credit instability.
Is it very effective?
iPhone export suspension
And it is Apple's suspension of iPhone exports that market players are now secretly suspecting of having a big effect.
Even in Russia, Apple has the largest share of smartphones, about 30%.
It is said that Apple Pay, which is Apple's smartphone payment, has also been canceled, which will put a big restriction on the daily life of Russian citizens who are advancing cashless payment.
Can citizens and businesses complain and encourage Putin's reversion by tightening finance, which is the blood of the economy?
I hope it will lead to an early ceasefire, but I can't be optimistic about the future.
Market quote The real meaning is
There is a saying "buy when the gunshot sounds" in the quotes related to wars and conflicts.
There is a strong resistance to profitable stories as the number of casualties in military invasions increases.
The origin of this maxim is the Battle of Waterloo in the 19th century, when Napoleon was defeated.
From an investor's anecdote that he quickly grasped the war situation and made huge profits by making full use of messages, Hayauma, ships, etc., one market person should quickly and accurately identify the situation in a confused situation. He told me that the importance of is a real lesson.
Local information that is confusing.
With a series of cyber attacks on fake news, we would like to accurately identify the situation in this extraordinary military invasion and its turmoil, and calmly convey the economic impact.
Scheduled to pay attention
Attention in the market is the board of directors of the European Central Bank on the 10th.
There will be a lot of interest in the debate over future price trends and the future of the economy in response to the situation in Ukraine.
Also in China, the NPC, one of the most important political dates, is open until the 11th.