Russian Media Claims Markets Bouncing Back in Face of U.S. Sanctions

Even as the U.S. imposes sanctions against Russia for its military actions against Ukraine, the country's media has claimed that their economy remains strong, asserting that "Russian stocks and the ruble have bounced back."

A report Wednesday in the influential Russian newspaper Pravda said that, in spite of the sanctions, "[Russia's economy] has avoided the worst so far."

"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 report said.

The assertion printed by Pravda followed a speech by President Joe Biden, in which he committed to enacting economic sanctions against Russia in an attempt to deter Russian President Vladimir Putin from sending troops into Ukraine. This includes blocking sanctions against Russian financial services, as well as expanding penalties against Russian government debt.

These sanctions are notably limited to allow for the potential of future economic actions against Russia, with Deputy National Security Advisor Jon Finer saying, "If Russia takes further actions, we will have further significant and severe consequences that we can impose via sanctions."

The harshest sanction from the U.S. has been against the company building Russia's Nord Stream 2 gas pipeline, a move Biden announced after Germany halted the pipeline's certification.

The pipeline, which could provide an estimated $15 billion of value to its Russian owners, is intended to double the petroleum output from Russia to Germany through the Baltic Sea. These sanctions, though, now represent what administration officials have called a "death knell" to Nord Stream 2.

Rubles
Russian rubles can be seen on a black background. The Russian newspaper Pravda has asserted that, despite economic sanctions being imposed by the United States and other countries, Russia's economy has remained strong. The report even asserted that Russia's stock market has actually climbed since the sanctions were announced. Kirill Kudryavtsev/Getty

Despite actions from the U.S., the report from Pravda continued to assert that the actual economic impact from American sanctions was minimal.

"[State-owned Russian bank] Promsvyazbank (PSB) was ready for the new sanctions because it was originally created as a support bank for the defense industry," the report said. "Following US President Joe Biden's speech...Russian stocks and the ruble have bounced back."

Pravda also claimed that the Moscow Exchange, Russia's largest stock exchange, jumped more than 4 percent following the announcement of sanctions. The report additionally said that Russia's official currency, the ruble, was "strengthening against the euro too."

Beyond these claims, the report noted the absence of sanctions against Sberbank—Russia's largest bank—as well as another large financial services company, VTB. As a result, Pravda said, these banks saw their shares rise by 7.5 percent following Biden's speech.

Even with these assertions in the Russian media hoisting up their economy, countries continue to impose further sanctions against Russia as the country appears to be preparing for a large-scale invasion of Ukraine. Beyond the U.S. and Germany, the United Kingdom has imposed notable sanctions as well.

This includes restrictions against five large Russian banks, U.K. Prime Minister Boris Johnson said Tuesday.

"We are prepared to go much further if Russia does not pull back from the brink," U.K. Foreign Secretary Liz Truss said. "We will curtail the ability of the Russian state and Russian companies to raise funds in our markets, prohibit a range of high tech exports, and further isolate Russian banks from the global economy."

Canada, Japan and Australia have also imposed sanctions at a similar level.

As a result, experts have stated that Russia will likely experience significant economic downturns in the near future.

"We expect further declines near-term in the Russian stock market," economic analysts at JPMorgan Chase wrote in a client letter Tuesday. Wall Street officials additionally bumped down Russian equities from "neutral" to "overweight."

Newsweek has reached out to the Russian Ministry of Foreign Affairs for comment.