Ukraine Update: Moscow Considers Easing Capital Controls

(Bloomberg) — Russia may rolling back more of the capital controls imposed to stabilize markets after its invasion, now into its 50th day. President Joe Biden announced $800 million in additional U.S. military aid for Ukraine, and the European Union agreed to provide more cash for weapons.

The warship Moskva has suffered unspecified damage, Moscow said, while a Ukrainian official said the flagship vessel of Russia’s Black Sea fleet was hit by anti-ship missiles. Russia continues to reposition its forces for renewed attacks in the east and south of Ukraine, although the U.K. said the continued defence of Mariupol by Kyiv’s military is tying down significant numbers of Russian troops and equipment. 

Russia reiterated a warning if Finland and Sweden decide to join NATO. The EU told member states that complying with President Vladimir Putin’s demand for Russian gas imports to be paid for in rubles would violate sanctions. 

Key Developments

Russian Troops Risk Repeating Blunders If They Try for May 9 WinBiden Sends Heavy Weapons as Ukraine Faces New Russia OffensiveEU Warns Putin’s Rubles-for-Gas Demand Would Breach SanctionsRussia Considers Next Step in Loosening Wartime Capital ControlsBiden Gets Ahead of U.S. Policy Again With ‘Genocide’ RemarkGermany’s Faustian Pact With Russia Haunts Industrial Giants

All times CET: 

Ukraine Needs $7 Billion Per Month, Zelenskiy Tells EU (11:15 a.m.) 

Ukraine needs $7 billion per month in immediate financing help to cover social payments and salaries, President Volodymyr Zelenskiy told European Commission President Ursula von der Leyen when she visited Kyiv last week, according to people familiar with the matter. 

Zelenskiy also discussed the challenges Ukraine faces trying to export its grain, with von der Leyen saying the bloc would use its expedited border crossing procedures to help, the people said.

Russian Stocks Down for a Fifth Day (10:23 a.m.)

Russia’s stock benchmark MOEX Index fell for a fifth day as Russia reiterated a warning if Norway and Sweden decide to join NATO. Stocks are down about 3.8% for the week. 

Stocks and government bonds in Europe were steady as investors await the central bank’s meeting later on Thursday for cues on the path of monetary policy. U.S. equity futures are narrowly mixed so far. 

The commodity-fueled jump in costs exacerbated by Russia’s war in Ukraine continues to ripple across the global economy and temper market sentiment.

Russia May Move Nuclear Arms to Baltics if Sweden, Finland Join NATO (9:46 a.m.)

Russia threatened to deploy nuclear weapons in and around the Baltic Sea region if Finland and Sweden join the North Atlantic Treaty Organization as tensions fueled by Vladimir Putin’s invasion of Ukraine spread.

“In this case, there can be no talk of non-nuclear status for the Baltic,” Dmitry Medvedev, deputy chief of the Security Council and former president, said in a Telegram post Thursday, suggesting Russia may deploy Iskander missiles, hypersonic weapons and nuclear-armed ships in the region.

Russia has repeatedly warned both nations of consequences if they decide to join the alliance. 

Finns Start Path Toward NATO as Sweden Seen Inching Closer 

Russia Tests Cruise Missiles in Sea of Japan (9:42 a.m.)

Two submarines from Russia’s Pacific Fleet conducted successful launches of Kalibr cruise missiles from the Sea of Japan at sea targets, according to Tass. Russian subs previously tested the missiles in December. 

Natural Gas Slips on Russian; Oil Declines (9:36 a.m.) 

European natural gas prices declined on expectations of higher Russian flows via Ukraine and increased supplies from Norway. Benchmark Dutch front-month gas futures fell as much as 3.2% and were down 2.7% by 8:58 a.m. in Amsterdam.

Oil also fell after a two-day rally that pushed prices back above $100 a barrel. Investors digested a raft of factors from the continuing fallout from Russia’s invasion of Ukraine to China’s virus lockdowns. Brent crude for June settlement dropped 1.2%. 

Oleg Deripaska’s Superyacht on the Move (9:00 a.m.)

Clio, a $65-million superyacht tied to Oleg Deripaska, the Russian aluminum billionaire whose connections to Vladimir Putin have put him on sanctions lists, is on the move again after being anchored off the Maldives. 

Authorities in the U.S. and allies in the U.K., Italy, France and Germany are trying to locate the luxury boats and other properties of Russian tycoons. Nearly a dozen yachts have already been seized. 

Putin Tells Austria Gas Can Be Paid in Euros (8:41 a.m.) 

Vladimir Putin is continuing to make contracted gas deliveries to Europe and will accept payments in euros, Austrian Chancellor Karl Nehammer told the APA news service days after meeting the Russian president.

It’s unclear what Putin was referring to. Under the new payment procedure demanded by the Kremlin, European buyers would need to have two accounts with Gazprombank — one in euros and one in rubles — and the Russian lender would be responsible for making the conversion. 

Irish Foreign Minister Visits Kyiv (8:44 a.m.)

Ireland’s Foreign Minister Simon Coveney visits Kyiv on Thursday to meet with Ukrainian counterpart Dmytro Kuleba and defense minister Oleksii Reznikov. Topics will include how Ireland can assist Ukraine in its application for EU candidate status, provide political, security and humanitarian support, and taking forward further EU sanctions on Russia.

Russia Considers Easing Capital Controls (7:40 a.m.) 

Russian authorities are considering a step-by-step approach to rolling back the harsh capital controls imposed to stabilize markets after the invasion of Ukraine.

Discussions this week focused on options that included extending the deadline for exporters to carry out mandatory conversions of their overseas earnings into rubles and lowering below 80% the share of foreign proceeds that companies are obliged to sell in the market, according to people informed on the matter.

The wartime controls have created a mismatch between the supply and demand for foreign currency, feeding a rally in the ruble that helped it regain all ground lost after the war began. Some Russian metal and mining companies are now struggling to sell dollars in such big volumes, according to people familiar with the matter. 

German Voters Back Sending Heavy Weapons (7:30 a.m.)

A majority of German voters favors supplying Ukraine with heavy weapons like tanks and fighter jets, according to a poll published Thursday. 

Germany has already sent Ukraine a considerable amount of military equipment, including anti-tank and anti-aircraft systems. Chancellor Olaf Scholz is under pressure to do more; even some members of his ruling coalition have criticized him for what they say is excessive caution. The Infratest Dimap poll of 1,226 voters for public broadcaster ARD showed that 55% support sending heavy weapons and 37% are against.

Dash to Quit Russian Coal Triggers Rally (5:24 a.m.)

Asian coal prices kept rallying — taking the gain in April to more than 20% — as Japanese and South Korean utilities avoided Russian fuel. Several Japanese power generators are seeking cargoes to replace Russian coal after Tokyo said last week it would ban imports, according to traders with knowledge of the matter. 

Australia Sanctions 14 Russian Enterprises (2:54 a.m.)

The Australian government imposed targeted financial sanctions on 14 Russian state-owned enterprises of strategic and economic importance to Russia, Minister for Foreign Affairs Marise Payne said in a statement. The firms include transportation company Kamaz, shipping companies SEVMASH and United Shipbuilding Corporation, as well as Russian Railways.

EU Says Rubles-for-Gas Violates Sanctions (11:25 p.m.)

The EU’s executive arm said that complying with Putin’s demand for Russian gas imports to be paid for in rubles would violate sanctions imposed on Moscow. Most EU member states have said they won’t pay rubles for gas. Russia has threatened to halt deliveries if buyers don’t accept the new rules.

Odesa Governor Says Russian Warship Hit by Missiles (10:49 p.m.)

Maksym Marchenko said on his Telegram account the Russian warship Moskva was “seriously damaged” after a strike from anti-ship missiles. He didn’t say where the reported attack occurred in the Black Sea, or how many missiles were fired. Moskva is a flagship cruiser for Russia that gained notoriety in the early days of the conflict as one of two warships that confronted a small contingent of Ukrainian guards on Snake Island in the Black Sea.

The Ukrainian armed forces said on Telegram late Wednesday only that “something” had happened to the ship. Interfax, citing Russia’s Defense Ministry, said the Moskva had been damaged when ammunition detonated during a fire. The crew was evacuated, according to the Interfax report. 

Russia Sanctions Members of U.S. Congress (8:41 p.m.)

Russia is introducing retaliatory sanctions against 398 members of the U.S. House of Representatives, according to the Ministry of Foreign Affairs. It had previously sanctioned other members including House Speaker Nancy Pelosi.

The measures come in response to those imposed by the Biden administration on March 24 against delegates of Russia’s Duma. Russia is also imposing counter-measures against senators of Canada’s Parliament.

Biden Pledges $800 Million More in Weapons (8:07 p.m.)

Biden said he is authorizing an additional $800 million in weapons, ammunition and other security assistance to Ukraine.

“This new package of assistance will contain many of the highly effective weapons systems we have already provided and new capabilities tailored to the wider assault we expect Russia to launch in eastern Ukraine,” Biden said in a statement after a phone call with Ukraine’s President Volodymyr Zelenskiy. “These new capabilities include artillery systems, artillery rounds, and armored personnel carriers. I have also approved the transfer of additional helicopters.” 

Russian Forces Hobbled by Morale Problem, U.S. Says (5:53 p.m.)

Russian forces continue to face major morale problems even as they prepare helicopters, artillery and troops for a renewed push in the east of Ukraine, a senior U.S. defense official told reporters.

Javelin missiles and other forms of military assistance continue to flow into Ukraine through airlift deliveries and ground movement, the official said. The official added that there are no indications that China has offered tangible lethal or non-lethal assistance to Russia. 

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