Russia

Russia has pledged 19.5 billion roubles ($238 million) in state support for airlines to refund passengers flying on routes that have been cancelled due to sanctions, Russian Prime Minister Mikhail Mishustin said on Thursday, Reuters reported.

People on the streets of Berlin have waved Ukrainian flags in demonstrations of support since Russia invaded Ukraine in February. But those who drove to the rallies did so largely in cars powered by oil from Russia, which provides most of the fuel to the German capital, Reuters reported. Just over a third of Germany's crude oil came from Russia last year, official data shows. Until the invasion of Ukraine in February, the dependence of Europe's largest economy on cheap energy from Russia – in part, a legacy of the Cold War – was not viewed as problematic by the authorities.

Annual inflation in Russia accelerated to 17.49% as of April 8, its highest since February 2002 and up from 16.70% a week earlier, the economy ministry said on Wednesday, as the volatile rouble sent prices soaring amid unprecedented Western sanctions, Reuters reported. Prices on nearly everything from vegetables and sugar to clothes and smartphones have risen sharply in recent weeks after Russia on Feb. 24 began what it calls "a special military operation" in Ukraine.

Oil is backing up through Russia’s energy supply chain and leading to a drop in crude-oil production, a blow to Moscow’s main economic engine as the war in Ukraine rages, the Wall Street Journal reported. Refiners are trimming output and in some cases closing down because of falling demand at home and abroad. Storage space is running low in pipelines and tanks. Wells, which pump from some of the world’s biggest crude reserves, are dialing down production. The losses so far are modest, and overall the industry continues to generate massive amounts of revenue for Moscow.

Russian Railways JSC has been ruled in default by a derivatives panel after missing a bond interest payment, the first such decision since Russia was slapped with extensive sanctions that complicated financial transactions, Bloomberg News reported. A failure-to-pay credit event occurred after a coupon due on March 14 failed to reach investors by the end of a 10-day grace period, according to the Credit Derivatives Determinations Committee. The decision could set a precedent for the Russian government and local companies which have found themselves in a similar position.

The credit ratings agency Standard & Poor’s has downgraded its assessment of Russia’s ability to repay foreign debt, signaling rising prospects that Moscow will soon default on external loans for the first time in more than a century, the Associated Press reported. S&P Global Ratings issued the downgrade to “selective default” late Friday after Russia arranged to make foreign bond payments in rubles on Monday when they were due in dollars. It said it didn’t expect Russia to be able to convert the rubles into dollars within the 30-day grace period allowed.

Russia will take legal action if the West tries to force it to default on its sovereign debt, Finance Minister Anton Siluanov told the pro-Kremlin Izvestia newspaper on Monday, sharpening Moscow's tone in its financial wrestle with the West, Reuters reported. "Of course we will sue, because we have taken all the necessary steps to ensure that investors receive their payments," Siluanov told the newspaper in an interview. "We will present in court our bills confirming our efforts to pay both in foreign currency and in roubles. It will not be an easy process.

Russia will halt bond auctions for the remainder of 2022 due to prohibitive borrowing costs, Finance Minister Anton Siluanov was quoted as saying by Izvestia, Bloomberg News reported. “We do not plan to go to the local market or foreign markets this year,” Siluanov told the Russian outlet. “It makes no sense because the borrowing cost would be cosmic.” With Russia under financial and economic sanctions by the U.S.

Germany's energy network regulator on Friday said it would ensure ongoing operations at Gazprom Germania, a trading, storage and transmission business abandoned by Russia's Gazprom, and called on market operators not to cut ties, Reuters reported. With assets and subsidiaries in Germany, Britain, Switzerland, Belgium, the Czech Republic and outside Europe, the firm's activities are essential for the European gas market and its supply to industry and households.

The Russian central bank sharply cut its key rate to 17% on Friday and said future cuts were possible, as emergency steps had contained the risk to financial stability, brought deposits back to banks and helped limit the threat of inflation, it said, Reuters reported. Last month, the central bank kept its key interest rate at 20% following a massive emergency hike in February and said it would start buying OFZ government bonds, warning of an imminent spike in inflation and a looming economic contraction. Russia sent troops into Ukraine on Feb.