The war between Russia and Ukraine ceased to be a face-to-face battlefield and has moved to the economic field with the sanctions imposed by the United States and its Western allies with the intention of persuading Vladimir Putin to stop his advance in Ukraine; and with “destroying the Russian economy,” according to White House officials.
At the end of February, the European Union decided to exclude several Russian banks from the SWIFT interbank payment system and formalized the halt of transactions with the Central Bank of Russia. Likewise, the US prohibited all transactions with the Russian issuing entity.
The first to react have been the stock markets and commodities like oil that reached US$ 106.26 this Tuesday, March 1.
Daniel Carpio, director of operations for XTB in Peru, stated that the raw it is an “important thermometer” for economies and their development, since “an increase in the price of this drives the rise in prices in different products and is quickly transmitted directly to the final consumer.”
Russia It contributes approximately 10% of the world’s oil, but “in the face of the sanctions that the US and its allies will eventually impose, it will not have the usual commercialization and the market supply would be reduced,” explained the expert.
Inflation on the rise due to uncertainty
The rise in the barrel generated fears about higher inflation that could complicate the work of the world’s central banks such as the Federal Reserve (fed), the European Central Bank (ECB) and also to Latin America; and it is that the geopolitical crisis between Russia to Ukraine is considered a potential threat to economic recovery.
Year-on-year inflation for January reached 7.5% in the US., which led to anticipate “a faster and more determined increase in the reference rate by the FED”, recalled Arturo García, professor at ESAN Graduate School of Business; however, “with the conflict, the pressures for greater and more continuous increases in said rate have intensified.”
How does the war between Ukraine and Russia impact Peru’s inflation?
John Joseph Marthansformer director of the Central Reserve Bank of Peru (BCRP), noted that the impact of war between russia and ukraine At a global level, the level of Peru and emerging markets will depend on two elements: “the magnitude of the armed conflict, that is, its intensity; and duration”.
“If we limit both elements there will be volatility within emerging markets,” said the former official.
Along these lines, he affirms that the volatility of the financial markets will affect the relative stability of the foreign exchange markets at a global level, which although there is a slight calm today, “will translate into the possibilities of controlling the appropriate administration of inflation as Peru”.
The BCRP raised its reference rate for the last time on February 10, placing it at 3.50%.
“Without a doubt there will be an international policy of raising interest rates at a global level, this will be led by the central banks of developed countries,” he advanced.
Despite this, Marthans maintains that Peru has tools to cushion the effects of the geopolitical conflict both on the exchange front and the price structure due to “the strength and economic fundamentals, the position of international reserves and the good management of public debt.”
“If there is an increase in the rate, the one that will be least affected is Peru, if there will be volatility, the one that will be least affected is Peru, if there is an increase in prices, the one that will be least affected is Peru. I am not saying that it will not be affected, Peru has tools to cushion part of the impact of the Russian-Ukrainian crisis in the short term”, he concluded.
A few days ago, the head of the Ministry Economy and Finance (MEF)Oscar Graham, recalled that it is the responsibility of the Central Reserve Bank of Peru (BCRP) to adopt measures to cushion the impact of the foreign conflict.
Source: Larepublica
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