By Jonathan Davies

Russia' credit rating has been cut to "junk" for the first time in a decade by US ratings agency Standard and Poor’s.

S&P has given Russia the BB+ rating, the same as Indonesia and Bulgaria. The new rating means that Russia will find it harder to borrow money from investors.

“Russia’s monetary-policy flexibility has become more limited and its economic growth prospects have weakened,” S&P said in a statement.

“We...see a heightened risk that external and fiscal buffers will deteriorate due to rising external pressures and increased government support to the economy."

The Russian economy has struggled massively since mid 2014 as a result of falling oil prices and economic sanctions imposed by the US and EU following the Ukraine conflict.

Market experts expected the Russian economy to contract by 4-5% this year.

Russia’s finance minister Anton Siluanov described the decision as “excessive pessimism”.

He said: “The decision shouldn’t have a further serious impact on the capital market because market participants already priced in the risks of a downgrade to Russia’s credit rating.”

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