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Volatility is back – the VIX index rose last week by more than 30% to 26.1. Global equities remain under pressure amid a steady rise in US bond yields, as well as nervousness around the pace of US Federal Reserve tightening and weak economic data. It is worth mentioning that even the cryptocurrency market couldn’t escape the suffering. Last Friday Bitcoin has fallen about 8%, losing the $40,000 area. With higher interest rates and less stimulus, asset valuations could seek a new lower breakeven point in a market dominated by risk-off sentiment.
It is worth noting that the drop in the digital currencies market could have been affected by the fact that Russia’s Central Bank has proposed banning cryptocurrency trading in the country. According to the Russian regulator, the volume of transactions of Russian citizens with cryptocurrencies, according to some estimates, reaches $5 billion a year.
The geopolitical concerns also don’t help. Last week Republican Jim Banks of the US House of Representatives has introduced a new sanctions bill against Russia. In addition to President Vladimir Putin and senior Russian officials, the sanctions list includes a number of security officials, journalists, major businessmen, and the Nord Stream 2 gas pipeline.
The draft sanctions, which the media have dubbed the “Putin Accountability Act,” was introduced on January 19, but the text has not yet been officially published. However, supporters of a mirror response in case the bill is passed by the US Congress have already appeared in parliament. Dmitry Belik, a member of the Duma Foreign Affairs Committee, believes that the best response would be to break off diplomatic relations with the countries that have joined the anti-Russian sanctions.
In addition to economic sanctions, Banks would officially recognize Russia as a “sponsor of terrorism” and declare that it supports “terrorist forces” in Donbas. The Republican opposes any negotiations involving Russia on security guarantees in Europe until Moscow restores Ukraine’s territorial integrity and returns Crimea.
In the Middle East, meanwhile, some progress is noted in relations between Iran and Saudi Arabia. To be more precise, Iranian Foreign Ministry spokesman Saeed Khatibzadeh stated that Iran intends to reopen its embassy in Saudi Arabia. He said that Iranian diplomats have received a visa to draw up plans to reopen Iran’s mission to the Organization of Islamic Cooperation, which is based in Jeddah.
It should be recalled that the severance of relations between Saudi Arabia and Iran occurred in 2016. Riyadh executed Shiite preacher Nimr al-Nimr, a critic of the Saudi monarchy, in early January of that year. In response to the preacher’s execution in Tehran, a mob stormed the Saudi embassy. The countries then closed their embassies to each other.
