Ukraine’s Eurobonds tumbled after the Finance Ministry said the country is ready to consider debt restructuring as it negotiates an international aid package and military tension with Russia simmers.
Russian stocks slid the most in more than five years after President Vladimir Putin ordered the deployment of troops to Crimea, spurring prospects of sanctions against the country.
As Ukraine investors greeted the ouster of President Viktor Yanukovych with the biggest bond rally this year, calls by interim leaders for as much as $35 billion in aid are weighing on the currency.
Russian incomes declined the most since 2011, pushing retail sales to their slowest growth in almost four years as joblessness and slowing consumer lending sapped household purchasing power.
The hyrvnia slumped, extending its biggest monthly decline in more than four years, and Ukrainian bond yields surged on speculation the nation’s political crisis will worsen.
Ukrainian bonds fell, extending the biggest weekly drop on record, as street protests intensified after opposition parties rejected government proposals to end a two-month stand off. The hryvnia weakened to a four-year low.
Economists pushed back forecasts for a cut in Russia’s benchmark rate today after the central bank said that inflation would slow to next year’s target of 5 percent only in the second half.
The ruble slid to a five-year low as investors wagered Bank Rossii accepts the weakness as it transitions to a free-floating currency this year.
Ivan Tchakarov, chief economist at Renaissance Capital in Moscow, comments on how U.S. debt talks may affect emerging markets. He spoke by telephone from the Russian capital today.
Ukraine is unlikely to get more money from the International Monetary Fund as part of a $15.6 billion bailout program before parliamentary elections next year, Renaissance Capital said.
"The IMF may recommend some kind of debt restructuring along the lines of rescheduling of obligations and extension of maturities."
- Ivan Tchakarov on Mar 05, 2014