Friday, April 25, 2014

Cold War II Heats Up with S&P Downgrading Russian Currency Rating

MOSCOW, April 25 (Reuters) - Credit agency Standard & Poor's cut Russia's foreign currency ratings on Friday, saying further downgrades were possible if the West imposed tighter sanctions against Moscow in response to the crisis in Ukraine.

Moscow said politics had played a role in the downgrade, the first by a major agency since Russia seized Crimea from Ukraine in March and leaving the S&P rating just one notch above junk status.

Foreign investors have been pulling money out of Russia since the country's economy hit the rails last year, a process that has intensified along with western concerns about Ukraine.

S&P said outflows might now speed up further.

"The tense geopolitical situation between Russia and Ukraine could see additional significant outflows of both foreign and domestic capital from the Russian economy and hence further undermine already weakening growth prospects," the agency said in a statement.

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