Today, March 3, the Russian ruble fell to a new low, after Russia's sovereign debt was downgraded to 'junk' status.
A countries sovereign debt is the amount borrowed by a country and their sovereign credit rating is an assessment of the government's ability to pay it back.
Now, Russia's debt and credit ratings were slashed to 'junk' status by Moody’s Investors Service and Fitch Ratings.
Advert
The news comes as Russian president Vladimir Putin's invasion of Ukraine continues.
Moody's and Fitch downgraded Russia's credit status by six notches, with both signalling that further downgrades could follow, as per The Wall Street Journal.
In a statement relating to the rating change, Fitch cited the international sanctions imposed on Russia as a result of Putin's invasion of Ukraine as the reason for the change.
Advert
The sanctions have 'heightened macro-financial stability risks, represents a huge shock to Russia's credit fundamentals and could undermine its willingness to service government debt', Fitch said.
Moody's also issued a statement about the change, saying, 'The significant concerns around Russia's willingness to service its debt are a reflection that Russia's institutional strength has very materially weakened with increasing evidence that the executive faces few checks and balances.'
S&P Global Ratings made a similar downgrade last week, which means that all three major world ratings firms now place Russian debt to be sub-investment grade.
Since the ratings slash, the ruble has plummeted further, dipping to 117.4 to the dollar and 125.1 to the euro at the time of writing, Reuters reports.
Advert
The Russian central bank has also imposed a 30% commission on foreign currency purchases, in the hopes of limiting the demand on dollars, but this has not halted the ruble's continuing decline in value as hoped.
The ruble's sharp decline in value and change in the country's debt rating can be attributed to the strict sanctions imposed on Russia by the EU, US, UK and Canada.
Last weekend, Western countries banned a number of Russian banks from the SWIFT global network.
In addition, the Russian Central Bank was restricted from using $640 billion of international dollar reserves, BBC News reports.
Advert
With the ruble sharply declining in value, Russia is in the throws of financial turmoil.
Steve Hamilton, an economist at George Washington University, commented on the impact of sanctions on Russian sectors. 'This is going to generate a kind of currency crisis, financial crisis, and an economic crisis in Russia,' he said.
Today marks the eighth day of war in Ukraine as Putin's invasion continues. Western countries have not ruled out the possibility of further sanctions.
If you would like to donate to the Red Cross Emergency Appeal, which will help provide food, medicines and basic medical supplies, shelter and water to those in Ukraine, click here for more information
Topics: Russia, Ukraine, Vladimir Putin, Volodymyr Zelensky, World News