- Russia’s ruble crashes early morning by 40% against US dollar.
- Russia bans foreign trading hours.
- The sanctions put on $640 billion of Russia is causing a strain on the national currency.
Russia’s invasion of Ukraine has taken a dramatic turn. After the massive losses that Ukraine has incurred, it seems like now it’s time for payback. After two days of the invasion, the Western democracies imposed restrictions on the Central Bank of Russia to prevent it from moving $640 billion in international reserves. European officials have also reported that at least half of the amount will be ceased by this move. This is a big blow for the Russian economy and thus has been called a “financial nuclear bomb” that has been dropped on the country.
To save the crashing Ruble, Russia’s central bank has raised the key rate of the currency from 9.5% to 20%. This measure has also been taken to prevent a bank run. Nevertheless, the ruble has plunged 40% against the dollar in early Monday exchanges. The sanctions of the West are supposed to put more strain on the national currency and may also trigger high inflation.
Russia has eased restrictions on banking operations to bring the situation under control and has also added more cash into the system. However, to stop a massive cash outflow, the country has restricted foreign trading hours before the market is ready to be opened. Russia fears that non-resident investors may panic and sell out their equities.
The European Union has also made commitments to remove Russia from SWIFT (Society for Worldwide Interbank Financial Telecommunication), a Belgian co-operative society to facilitate global financial transactions.