BOFIT Viikkokatsaus / BOFIT Weekly 2019/33

At the beginning of August, president Donald Trump signed an executive order preventing United States financial institutions from participating in new issues of Russian sovereign foreign currency bonds, effective August 26. The executive order also calls the US Treasury to oppose any new lending to Russia by international financial institutions (such as the World Bank). The actions are based on US code pertaining to international violations in the use of chemical and biological weapons. Russia is alleged to have poisoned several persons with Novichok nerve agent in Salisbury, England in March 2018.

The impacts from the latest round of sanctions are likely to be minor as the Russian government has little need to borrow on international markets at the moment. Virtually all of its new bond issues are in rubles. At the end of July, foreign investors held about 30 % of government-issued ruble-denominated paper and slightly over half of Russia’s euro-denominated government bonds.