- There are billions of dollars of Russian debt in foreign banks that are at a high risk of defaulting due to the war and sanctions. Due to this, even the foreign banks who do not have Russian debt become wary of trading with the former, thereby, inviting a liquidity crisis. Austria, France & Italy have a combined Russian debt of almost USD 67.5 billion that they risk losing; so is the case with US and EU banks.
- Don’t forget that the war will also empty the coffers of the already-struggling Ukraine and that it will add to the default risks!
- In addition to this, since the banking services in Russia and Ukraine have been hit, several European banks will also face the heat in terms of revenue loss. Switzerland, Cyprus and the UK are the biggest destinations for Russian oligarchs seeking to store their cash overseas. This will be a definite loss of business for banks in these countries.
Source - Reuters
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Business & Funds
- With the sanctions and the ouster from SWIFT in place, any company that is owed money by Russian businesses is going to face challenges in getting paid.
- Companies and investment funds with high-value assets in Russia will see the heavy devaluation of their assets and eventual write-offs if things go even more south. If that’s the case, it could also lead to panic sell-offs in the stock markets.
Oil & The Hole In Your Pocket
- The prices of commodities have also not been spared. Crude oil prices were at USD 139 a barrel for the first time in 14 years and continue to hover around USD 100. Russia is the third-largest producer of crude, after the US and Saudi Arabia. As India imports 85% of its oil requirements, it will surely put a strain on the budget.
- Higher energy costs would also likely make “every step in food processing and transportation more expensive.” Prices for a number of agricultural commodities are jumping, as Russia and Ukraine together account for about 20% of global corn exports and 25% of wheat exports.
Source - Reuters
3. “The impact on growth, inflation, current account and fiscal deficits will depend on the persistence of commodity prices at elevated levels,” the department of economic affairs in India said in its latest monthly economic report for February. Morgan Stanley pegs retail inflation at 6% for the fiscal year 2023, much higher than the RBI’s 4.5%. It also lowered India’s GDP forecast for the fiscal year 2023 by 50 basis points to 7.9%, citing risks to macro stability due to high crude oil prices.
The Russia-Ukraine war has yielded almost a never-seen-before geopolitical response from the west. The embargoes have been comprehensive and swift. But there’s no winner in a war. Loss of life, livelihood and property is inevitable in armed conflicts. The economic ramifications will linger on for a long time in a time when we are still experiencing the wrath of the pandemic. It remains to be seen when the call for sanctions will be replaced by a call for dialogue and peaceful resolution.
If you wish to understand banking, investments & the world of finance from a global b-school, this is your chance. If you do have a basic understanding of finance, then this program will take you to the depths of Corporate Finance. And the best part is that if you don’t have any prior knowledge, AltUni ensures that you have your basics in place before the program begins!
Other Reasons Why You Should Sign Up For This Program
- Ace Core Topics - Master core Corporate Finance topics like capital structure & estimation, corporate & business valuation, mergers & acquisitions, etc.
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- In-Depth Curriculum - A total of 65+ hours of live & recorded learning content from top academia & industry experts.
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