Russian assets traded steady on Thursday as the world digested news of a plane crash that presumably killed Yevgeny Prigozhin, the leader of the Wagner mercenary group that challenged President Vladimir Putin with a march on Moscow two months ago.
(Bloomberg) — Russian assets traded steady on Thursday as the world digested news of a plane crash that presumably killed Yevgeny Prigozhin, the leader of the Wagner mercenary group that challenged President Vladimir Putin with a march on Moscow two months ago.
Read More: Yevgeny Prigozhin, Who Led Wagner Mutiny, Is Presumed Dead
The ruble declined 0.1% to 94.3650 to the dollar as of 12:40 p.m. in Moscow. The Russian government bond index also slipped 0.1% to 124.46. The benchmark stock index was down 0.7% to 3,125.71 points.
Four people close to Russian authorities said Prighozin’s death would restore some stability to Putin’s regime, asking not to be identified because of the sensitivity of the matter. It could also ease additional tensions with European states unsettled by Wagner activities, according to Grzegorz Drozdz, a market analyst at Conotoxia Ltd. investment company.
“The alleged death of Prigozhin may calm the tense situation between Russia with Belarus and the West following reports that mercenaries from Wagner’s group were stationed on the border with Poland,” Drozdz said. “Beyond this, however, Prigozhin’s own influence on the situation in Russia seems to have dwindled almost to zero” since the mutiny.
RUSSIA INSIGHT: Central Bank Behind Ruble Rout – One Chart (1)
The ruble has emerged as a barometer of health for the Russian economy, battered by shrinking export revenues and its isolation from international financial markets following its invasion of Ukraine last year. Infighting between the government and central bank over economic policy has spilled into the open in recent weeks.
The currency has advanced about 6% against the dollar since the nation’s central bank raised interest rates sharply at an emergency meeting on August 15. Year-to-date, it has lost about 22%, one of the worst performances among emerging-market currencies tracked by Bloomberg.
“The factors that have been putting pressure on the ruble are still live, such as a deteriorating external balance, challenges in access to hard currency, growing underlying inflationary pressures as the economy grows above potential, etc.,” said Erik Meyersson, chief emerging-market strategist at SEB AB in Stockholm.
“The problems in the Russian economy are likely less cyclical in nature than they are structural or war-related, meaning it is only so much the central bank can do via the interest rate instrument.”
Read More: RUSSIA INSIGHT: Central Bank Behind Ruble Rout – One Chart
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