SPDR® S&P Russia ETF
Inflation in Russia (ERUS) remained steady in May 2017. The only rise was in the price of food compared to the previous month.
Russia’s central bank recently lowered its key interest rate by half a percentage point to 9.25% in April 2017.
In addition to the recent interest rate hike, Putin may need to exercise capital control measures in order to cushion Russia’s depreciating ruble.
The GDP in Russia contracted for the first time since 2009 in November 2014. Consequently, the Russian ruble fell by about 14% against the dollar.
The Russian economy is suffering losses at a rate of $90 billion–$100 billion a year due to the oil price drop and the weak ruble.
On July 16, the US imposed additional sanctions against Russia for continuing to support pro-Russian separatists in Ukraine.
Russia’s natural resources industry’s growing reliance on Chinese lending may dilute the effect of sanctions aimed at the finances of Russian oil companies.
The International Monetary Fund has forecasted that the flight of funds from Russia this year will amount to ~$100 billion—it has already become difficult to acquire capital in Russia itself.
The imposition of sanctions on Russian firms basically means that the U.S. will no longer invest in these companies—the U.S. is effectively banned from providing closed medium- and long-term dollar funding to the banks and companies on the sanctions list.