Rouble and domestic shares are taking a hit

RUSSIA threatened to retaliate for a new round of sanctions announced by the US, as the rouble and local shares fell amid the spiralling tensions between the cold war rivals.

The US said it was imposing the new restrictions to punish President Vladimir Putin’s government for the March 4 nerveagent attack on former spy Sergei Skripal and his daughter in the UK.

The moves came just days after a bipartisan group of senators proposed a law mandating “crushing sanctions” – including on purchase of new sovereign debt and on big state banks – to punish Russia for election interference.

The threatened measures spooked investors, driving the rouble to the lowest levels since 2016 and pushing stocks like Aeroflot and VTB down as much as 6 percent.

“It is clear that major sanctions actions are looming against Russia now either by the administration, by Congress or both,” Tim Ash, a senior emerging-market strategist at Bluebay Asset Management in London, said. “All bets are off.”

After last month’s summit in Helsinki, where President Donald Trump was widely criticised for failing to call Putin to account over the election meddling, the US administration is under pressure to take tougher steps against Russia, even as Trump himself has called for closer ties.

For Putin, a meeting that seemed a triumph, is increasingly looking like a liability, as hopes of rapprochement with Washington are put off.

“Such measures are absolutely unfriendly and can hardly be associated with the constructive – difficult but constructive – atmosphere at the last meeting of the two presidents,” Kremlin spokesperson Dmitry Peskov said.

The latest US restrictions are required under the 1991 Chemical and Biological Weapons Control and Warfare Elimination Act, which mandates punishment of countries that use chemical weapons in violation of international law. The first wave of new sanctions is to take effect on August 22. More sweeping measures could come 90 days later. – Bloomberg