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Ukraine in the spotlight, Russia’s sanctions threat

The resignation of Ukraine’s central bank governor, Yakiv Smolii, this week is unlikely to upend the country’s IMF deal, but failure to replace him with a credible candidate or backsliding on recent key pieces of legislation would make this a major threat and risk Ukraine sliding towards sovereign default and a balance of payments crisis. Meanwhile, allegations that Russia placed bounties on US soldiers in Afghanistan has raised the threat of further US sanctions on Russia. The impact of the sanctions discussed so far would be limited, but Russia’s balance sheets are not in as good a state as they were last year to weather the effects. There is a risk that developments escalate further ahead of the US Presidential election in November.

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