Muted market reaction in Russia to expulsion of Russian diplomats

Early this week, nearly 30 countries followed the UK in expelling over 100 Russian diplomats from their countries. Many countries assess Russia to be responsible for the nerve agent attack in England in early March. While the coordinated expulsion of diplomats sent a powerful political signal, Russian market reactions were limited. The ruble-dollar rate depreciated by 0.4 % in the beginning of this week and the Moscow exchange's RTS index fell by about 1 %. Despite the modest market reactions, heightened political tensions will elevate also economic uncertainty.