Russia: US Tariffs An Act Of Economic War

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Today, Dmitry Medvedev, the prime minister of Russia, armed himself with a fighting speech, as he cautioned against any moves made by the United States to restrain the activities of its banks amid new sanctions.

Medvedev said that Russia would take any action initiated against its banks as “a declaration of economic war” between the two superpowers. Once this happens, Russia would be ready to respond with political and economic retaliatory measures, “or if needed, by other means.”

As an outcome, the rouble has dropped to its lowest level since June 2016. It temporarily hit 67.37 against the dollar this morning, after losing approximately 6 percent of its value since the beginning of the week.

However, it has since regained following the revelation of central bank data that was released today that showed that it had acquired 8.4bn roubles (£98.3 million) worth of foreign currency last Wednesday, and labelled the drop that was experienced during the week as a “natural reaction” to the sanctions.

In a Security Council meeting that was held today, Vladimir Putin, the president of Russia,  also moved to discuss the country’s response to what the officials called as “possible new unfriendly steps by Washington.”

Last Wednesday, the state department of the United States, revealed a new round of sanctions against Russia that pushed its currency down to a two-year low, and prompted a wider sell-off amid concerns of a trend emerging in the relations between Russia and the United States of America.

Economists have said that they anticipate that the Russian economy will improve by 1.8 percent in 2018. However, once the proposed sanctions are fully implemented, this could plunge to nearly zero in future.

Meanwhile the shares in Evraz, the Russian coal and steel mining company that is headquartered in London, fell by over 10 percent.

A proposal from a Kremlin economic aide included Evraz among other mining and metal companies as targets to raise more revenue for the state. This, coupled with the sanctions and currency woes today, have heavily weighed on the company.

The share price of Alrosa, a diamond miner, dropped by four percent as the news were revealed, however, it has since recovered to -1.29 percent.