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Russia Hit Hard by Sanctions, V and MA Halt Transactions
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The sanctions levied by the U.S. government on Russia are taking effect as several major global powers are imposing aggressive penalties on the country over the invasion of Ukraine. The economic sanctions have hampered the Russian Ruble while major financial service providers like Visa Inc. (V - Free Report) and Mastercard Incorporated (MA - Free Report) have restricted transactions in the country, per reports.
Additionally, the decision to cut off multiple Russian banks from SWIFT, an interbank messaging system, from the United States and its allies is likely to hurt the country’s cross-border financial activities. The sanctions are expected to hit Russia’s trading with other countries and foreign travels. The depreciation of Rubel is likely to add fuel to the fire.
With the Russian currency having a volatile nature, its central bank largely depends on foreign currencies like the American dollar and others for stability. Hence, the economic sanctions levied by the United States might hamper the exchange rate and the Russian central bank will require high interest rates to reduce money supply in the market to counter the situation. High interest can dampen Russia’s economic growth and make it difficult for the country to pay off debts, fears the investors.
Mastercard has a strong footprint in Russia and its decision to block several financial institutions in the country from its payment network can add to the woes for the locales. The Zacks Rank #3 (Hold) company is on a heightened alert anticipating cyber attacks and is working with security teams to keep operations secured. Visa also announced compliance with the sanctions. Both Visa and Mastercard are likely to comply with further restrictions and contribute largely to the humanitarian relief in Ukraine. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The sanctions are also likely to affect Russia’s energy sector, which constitutes a huge chunk of its consolidated budget. Cutting off Russian banks from the SWIFT international payment system can affect its oil export operations. This can make American crude dearer to several economies, especially in the West. British energy giant BP plc (BP - Free Report) decided to offload a 20% stake in Rosneft, a Russian oil giant, following the invasion of Ukraine. The decision can hit BP financially by $25 billion and slash almost half of its hydrocarbon reserves.
Another global energy company, Shell plc (SHEL - Free Report) is dumping Russian energy investment. Shell intends to exit the Sakhalin-2 LNG project and its joint ventures with Gazprom, a Russian state-run energy company. If this trend continues, Russia will lose foreign investment in its crucial energy sector.
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Russia Hit Hard by Sanctions, V and MA Halt Transactions
The sanctions levied by the U.S. government on Russia are taking effect as several major global powers are imposing aggressive penalties on the country over the invasion of Ukraine. The economic sanctions have hampered the Russian Ruble while major financial service providers like Visa Inc. (V - Free Report) and Mastercard Incorporated (MA - Free Report) have restricted transactions in the country, per reports.
Additionally, the decision to cut off multiple Russian banks from SWIFT, an interbank messaging system, from the United States and its allies is likely to hurt the country’s cross-border financial activities. The sanctions are expected to hit Russia’s trading with other countries and foreign travels. The depreciation of Rubel is likely to add fuel to the fire.
With the Russian currency having a volatile nature, its central bank largely depends on foreign currencies like the American dollar and others for stability. Hence, the economic sanctions levied by the United States might hamper the exchange rate and the Russian central bank will require high interest rates to reduce money supply in the market to counter the situation. High interest can dampen Russia’s economic growth and make it difficult for the country to pay off debts, fears the investors.
Mastercard has a strong footprint in Russia and its decision to block several financial institutions in the country from its payment network can add to the woes for the locales. The Zacks Rank #3 (Hold) company is on a heightened alert anticipating cyber attacks and is working with security teams to keep operations secured. Visa also announced compliance with the sanctions. Both Visa and Mastercard are likely to comply with further restrictions and contribute largely to the humanitarian relief in Ukraine. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The sanctions are also likely to affect Russia’s energy sector, which constitutes a huge chunk of its consolidated budget. Cutting off Russian banks from the SWIFT international payment system can affect its oil export operations. This can make American crude dearer to several economies, especially in the West. British energy giant BP plc (BP - Free Report) decided to offload a 20% stake in Rosneft, a Russian oil giant, following the invasion of Ukraine. The decision can hit BP financially by $25 billion and slash almost half of its hydrocarbon reserves.
Another global energy company, Shell plc (SHEL - Free Report) is dumping Russian energy investment. Shell intends to exit the Sakhalin-2 LNG project and its joint ventures with Gazprom, a Russian state-run energy company. If this trend continues, Russia will lose foreign investment in its crucial energy sector.