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US President Joe Biden and Russian President Vladimir Putin had a telephone conversation earlier this week. Among several different issues discussed, Biden promised to retaliate for Russia’s alleged US election meddling and proposed that the two heads of state hold a summit soon to address some of the concerns. The Biden administration unveiled its fresh round of sanctions this week.
During the phone call last week, Biden and Putin discussed issues such as the sovereignty of Ukraine, the alleged Russian interference in the 2020 presidential elections, as well as the supposed SolarWinds cyberattack against the American government.
What are the sanctions?
As part of its retaliation, the US Treasury sanctioned 16 persons and 16 entities from Russia for purportedly interfering with the 2020 US Elections. According to the Treasury press release published on the 15th of April, Janet Yellen commented, “Treasury will target Russian leaders, officials, intelligence services, and their proxies that attempt to interfere in the US electoral process or subvert US democracy”. “This is the start of a new US campaign against Russian malign behavior.” she added.
Naturally, Russia is not pleased either. First, Biden calls Putin a ‘killer’ on national television, and now a fresh batch of sanctions is imposed on them. “This aggressive behavior will, of course, meet with a decisive rebuff,” Maria Zakharova, Foreign Ministry spokeswoman, said. “Washington must realize that they will have to pay the price of this deterioration in ties,” she added.
Moscow has summoned American ambassador John Sullivan for discussions that ‘are not going to be pleasant for him’.
US’ latest moves are the harshest ones that have been imposed on Russia in a while. Even though the US is expelling ten Russian diplomats working in Washington and restricting the US from buying new Russian sovereign debt, Biden claims he was ‘proportionate.’
Kremlin vowed to retaliate but indicated that they remain open to the proposed summit, just not in the short term.
It appears that both heads of state are interested in a more agreeable future, with Biden commenting that “The United States is not looking to kick off a cycle of escalation and conflict with Russia. We want a stable, predictable relationship.” However, he elaborated that it is his responsibility as president of the United States to protect the country from other countries interfering with US democracy.
How did the markets react?
As a result of the impending penalties, the ruble dropped, and Russian bonds fell but stabilized again soon after. In terms of the USD/RUB pair, FXStreet reported that it showed no immediate reaction to these remarks and was last seen losing 0.71% on the day at 75.7919. This week the USD/RUN pair continues its bearish approach, trading below 78.04, which is the April high, reports Axel Rudolph, Senior FICC Technical Analyst at Commerzbank.
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