Global rating agency Fitch downgrades Russia from ‘B’ to ‘C’, the second rating downgrade in a week, during Tuesday.

In addition to the rating cut, Fitch also mentioned, “The recent downgrade of a 'C' rating for Russia reflects belief that a sovereign default is imminent.”

Key quotes

The further ratcheting up of sanctions, and proposals that could limit trade in energy, increase the probability of a policy response by Russia that includes at least selective non-payment of its sovereign debt obligations.

To a lesser extent, the risk of imposition of technical barriers to servicing debt, including through the direct blocking of transfer of funds, or through clearing and settlement systems, have also risen somewhat since our last review.

Market implications

The news may propel USD/RUB towards another record high, around 129.70 by the press time.

Read: USD/RUB Price Analysis: Ruble keeps bounce off weekly resistance below 130.00