Investors have again run for cover in safe havens after President Vladimir Putin ordered Russia’s nuclear deterrence forces on high alert and the West imposed even heavier sanctions on Moscow. While locally, the government is embroiled in its own internal tug of war on Russia, the big question is would Putin press the nuclear button? BBC News reports Nobel Peace Prize laureate Dmitry Muratov, chief editor of the Novaya Gazeta newspaper, believes Putin’s threat last Thursday when he started the invasion of Ukraine was a direct threat of nuclear war.
In response, the West is hitting Russia where it can hurt most – its financial system. The BBC describes the economic onslaught, including the country’s exclusion for the SWIFT payment system as a “deployment of heavy weaponry in a financial theatre of war, designed to push the whole of Russia into as deep a recession as possible, with the added chaos of bank runs”. The system facilitates trillions of dollars of international payments between institutions.
Prominent Credit Suisse Group strategist Zoltan Pozsar warned in a note yesterday that the “exclusions from SWIFT will lead to missed payments and giant overdrafts similar to the missed payments and giant overdrafts that we saw in March 2020”. “Banks’ inability to make payments due to their exclusion from SWIFT is the same as Lehman’s inability to make payments due to its clearing bank’s unwillingness to send payments on its behalf. History does not repeat itself, but it rhymes.”
The economic sanctions have led to a big move back to the dollar and other safe-haven assets. “Several Russian banks have been blocked from using the SWIFT international payments system. This pushed the ruble over 30% weaker to an all-time worst level of 101.00 against the US dollar,” writes TreasuryONE.
“The rand, which had closed firmly at R15.14 on Friday, is trading back at R15.36 this morning. The local currency traded near R15.50 earlier this morning in thin Far East markets, and we are likely to see another volatile day,” cautions the forex trading house.
The risk-off sentiment has seen commodity prices jump once more, with gold gaining 1.2% at $1,909/oz this morning, platinum 0.5% to $1,059 and palladium 5.5% to $2,500. The price of aluminium has opened at a record high this morning as well and both Brent and WTI are up by over 5.0% as supply disruption concerns underpin the price of oil, reports TreasuryONE. Brent is trading at $103.15 and WTI at $97.09 this morning.
And while South Africa is trying to avoid picking sides by calling on both Russia and Ukraine to resume discussions about the current conflict, SA-born entrepreneur Elon Musk is open about whose side he’s on. The tech entrepreneur said his Starlink satellite service is up and running in Ukraine as he responded to a plea from the deputy prime minister to supply satellite-based communications to help resist Russia’s invasion of the country. Musk also earned himself a lot more new fans after tweeting that the company is sending Ukrainians the necessary equipment. Starlink’s low-orbit satellites provide high-speed broadband internet across the globe but access to the network requires the installation of a special antenna and modem.
Meanwhile, the crypto community has responded in their droves to a plea from the Ukrainian government for cryptocurrency donations, raising $17.2m since the start of the invasion to provide support to the military.
Here’s a roundup of the world’s top and most interesting headlines:
SA Business
Revamped SA Revenue Service reels in big fish, focuses on super wealthy – Daily Maverick
As fuel prices hit record highs, AA warns of further pain due to Ukraine invasion – Fin24
How much money cashiers, trolley collectors and other shop workers are paid in South Africa – BusinessTech
Global Business
War in Ukraine: Russian bank run ‘has already started’ as rouble plunges to all-time low – Sky News
The world’s largest sovereign wealth fund said it will dump its Russian assets on the Ukraine invasion – Business Insider
Desperate Afghans resort to selling their kidneys to feed families – AFP
Markets
Ukraine conflict: Russian rouble plunges after new sanctions announced – BBC News
Commodities from gold to grains rally as Russia faces i solation – Bloomberg/DM
Dow futures fall 450 points as traders assess ripple effects of Russia sanctions – CNBC
Opinion/In-depth
EXPLAINER | What is SWIFT and why does it matter in the Russia-Ukraine war? – Reuters/News24
‘He’s like the Tinder Swindler’: Magnitsky Act architect Bill Browder on Putin’s War – Daily Maverick
Zero to $3bn – Business Day Nigeria
Video
WATCH | ‘We don’t support this war’: Russians in Joburg protest against invasion of Ukraine – News24
‘No city in Ukraine is safe’: Family escapes missile strike – NY Times
Cost of Electricity | Electricity increase of 307% over 13 years – eNCA
