Russia's currency is tumbling after Western nations on Saturday agreed to put crippling sanctions on the country's financial sector in retaliation for its invasion of Ukraine.
The ruble fell about 30% against the dollar Monday — making it worth less than 1 U.S. cent — after the U.S., European Union & United Kingdom announced moves to block some Russian banks from the SWIFT international payment system and to restrict Russia's use of its massive foreign currency reserves. The system is used to move billions of dollars around more than 11,000 banks & other financial institutions around the world.
The ruble recovered ground after Russia's central bank sharply raised its key interest rate Monday to shore up the currency & prevent a run on banks. But it was trading at a record low 105.27 per dollar, down from about 84 per dollar late Friday.
A weaker ruble could cause inflation to surge, potentially angering Russians whose budgets will be stretched by soaring prices. It will also add to strains across Russia's financial system.
A sharp devaluation of the ruble would mean a drop in the standard of living for the average Russian, economists and analysts said. Russians are still reliant on a multitude of imported goods and the prices for those items are likely to skyrocket. Foreign travel would become more expensive as their rubles buy less currency abroad. And the deeper economic turmoil will come in the coming weeks if price shocks and supply-chain issues cause Russian factories to shut down due to lower demand.
"It's going to ripple through their economy really fast," said David Feldman, a professor of economics at William & Mary in Virginia. "Anything that is imported is going to see the local cost in currency surge. The only way to stop it will be heavy subsidization."
A rapidly depreciating ruble could also slam Russian companies that need to issue debt to raise capital.
"The [ruble] has gone into a tailspin, & most Russian bonds, whether directly sanctioned or not, have seen prices drop to levels suggesting significant risk of default," analysts with TD Securities said in a research note.
#russia #russianrublelessthan1uscent #freefall #russianrubleplunges #economicsanctions #inflation #usa #america #europeanunion #unitedkingdon #borisjohnson #joebiden #vladimirputin #volodymyrzelenskyy #belerus #ukraine #war #ww3 #worldwar3 #russiacripledfinancially #russianeconomy #rubleequalsonepenny #ukrainewar #ukrainefightsback #russiainvadesukraine #china #germany #poland #france #nato
Source: CBS
Follow Me
}
Comments