Falling oil prices and Western sanctions created in Russia for the worst Currency crisis since 1998 – now the rating agency Fitch has downgraded the country responded. The credit decreases to “BBB-” and there is no improvement in sight.
The US rating agency Fitch has Russia’s creditworthiness by the rating of BBB on BBB- and downgraded its outlook to “negative” is set. A further downgrade is possible. “The outlook has deteriorated significantly since mid-2014,” Fitch said on Friday evening in Paris.
Falling oil prices and the continuing conflict with Ukraine had led in Russia to the worst currency crisis since 1998, Fitch was in its reasoning on. With “BBB-” Russia is in its creditworthiness at Fitch now only just above the junk status and on a par with India and Turkey.
The price drop in the oil markets is the main reason for the problems of Russia, which its revenues to 40 percent of oil exports denies. For months the global oversupply continues to oil prices coupled with weakening demand. Compared with the highs in mid-2014, prices have more than halved.
Sanctions meet Russian economy hard
At the same time declared Fitch, that the measures imposed in March against Russia international sanctions, the country’s economy recharged. Russian banks and companies should be denied access to foreign capital markets.
German Chancellor Angela Merkel had slowed in Thursday’s debate on abolition of EU sanctions against Russia. She spoke out against it, to couple a gradual lifting of sanctions on the partial implementation of the Minsk Agreement for de-escalation in eastern Ukraine. Some EU countries had called for an easing of sanctions.
Fitch expects a contraction of the Russian economy by four percent in the current year. Low consumption and dwindling investment could only be partially offset by improved export situation, it said. Russia is currently being shaken by a violent rubles decline, which could exacerbate the economic crisis
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