US President Joe Biden announced the first tranche of financial sanctions against Russia for Moscow's move to recognise the independence of Donetsk and Luhansk People's Republics (DPR and LPR). The restrictions turned out to be milder than the measures that the United States and its allies were preparing in case of Russia's military invasion of Ukraine.
The US Treasury added the state-run corporation VEB.RF, Promsvyazbank defense bank (PSB) and dozens of their subsidiaries to the SDN sanctions list (blocking of assets, isolation from the dollar system);
For the time being, the United States and its allies are following the path of compromise and opt for moderate sanctions against Russian financial institutions. However, by doing so the USA leaves a potential to tighten the sanctions further.
Russia has avoided the worst so far. Promsvyazbank (PSB) was ready for the new sanctions because it was originally created as a support bank for the defense industry.
Following US President Joe Biden's speech devoted to the aftermath of Russia's recognition of the Donbass, Russian stocks and the ruble have bounced back.
The IMOEX2 index, which reflects the value of the Moscow Exchange index for the entire trading day, including additional sessions, soared by 4.12% to 3,095 points in just ten minutes.
The dollar depreciated sharply by 1.2% (₽1.1) and fell below ₽79 to 78.72, according to trading data on the Moscow Exchange. The ruble was strengthening against the euro too, which was trading at ₽87.82 and lost 1.24% (₽1.21) as of 22:40 Moscow time February 22.
During his speech, Biden said that the United States would impose sanctions against the sovereign debt of the Russian Federation and Russian financial institutions — VEB and PSB. Russia's major state-run bank Sberbank and foreign trade bank VTB were not on the list, which caused their shares to rise by more than 7.5%.
USA's new sanctions will also affect the Nord Stream 2 gas pipeline. At the same time, though, Gazprom shares rose by 4.2%.
Biden said that this is the first package of sanctions, and in the event of an escalation of the conflict over Ukraine, new sanctions will follow.
The Russian Ministry of Defense showed a video of the destruction of US-made M777 towed howitzers in Ukraine. The US systems were destroyed by the Russian Kub (Cube) kamikaze drone