Dark days ahead for the Russian rubleįrom 2017 through 2021, Russia’s currency traded between 57 and 80 rubles per dollar, meaning it’s since lost well over 20% of its value, and experts say more pain is on the horizon. While the efforts have led to a modest recovery in the ruble against the dollar, experts say the ruble is unlikely to return to its pre-war level. In response to the bank run, Russia restricted its citizens’ access to foreign currency exchanges and limited transfers abroad. federal funds rate, from 9.5% to 20% and supplied large quantities of liquidity to help banks manage withdrawals as Russian citizens deluged ATMs to pull out rubles and exchange them for foreign currency. The CBR hiked its policy rate, similar to the U.S. The central bank of Russia (CBR) quickly responded to the West’s economic retaliation by trying to stabilize its currency and reduce the impact of sanctions. The immense pressure on the Russian economy led credit rating agencies including Fitch, Moody’s, and S&P Global to downgrade Russia’s debt to junk status, with some warning that default may be “imminent.” The Russian stock market also closed on February 25 as losses piled up on the day of the invasion, and it won’t reopen until next week. and Europe, and authorities started seizing Russian oligarchs’ mansions, private jets, and superyachts. Russian equities were booted from indices in the U.S. and its allies banned Russian oil imports, revoked the country’s favored trade status, and cut off signature Russian exports like Vodka and caviar, while western businesses including Coca-Cola, McDonald’s, and Starbucks pulled out of the country altogether. They will be increasingly feeling the pinch of these sanctions.” The West’s retaliation against Russia hits the ruble hardĪfter the war in Ukraine began, Western nations immediately cut economic ties with Russia in a move that has only just begun to devastate the country’s economy. Russia has already lost a lot in this conflict. “I don’t see the medium to long-term valuation being positive if the situation in Ukraine keeps escalating. “I believe what we are seeing now with the reappreciation of the ruble is just a correction,” Ipek Ozkardeskaya, a senior analyst at Swiss online bank Swissquote, told Fortune. Trading remained closed on Russia’s stock market for an eighth consecutive day Wednesday, as the Central Bank feared a dramatic sell-off when markets eventually reopen.Through the first days of the conflict in Ukraine, the Russian ruble lost roughly half of its value, going from 84 rubles per dollar prior to the invasion to as high as 154 rubles per dollar by March 7.Īlthough the ruble has since regained some of its value, rising to 96.5 rubles per dollar on Tuesday, experts say the currency will face more pressure as the West’s economic sanctions increasingly bite. President Vladimir Putin previously signed orders forcing companies to sell at least 80% of any foreign currency earnings they make and blocked companies and individuals from sending foreign currency abroad. Russians have withdrawn record amounts of cash - both rubles and hard currency - since Russia invaded Ukraine and the West slapped tough financial restrictions on Moscow in response. “But there is also a risk that the population will negatively react to these measures and the outflow of funds will continue.” “If this helps soften the panic among the Russian population, then the Central Bank will finally have taken control of the situation in the banking sector,” said Loko Invest analyst Dmitry Polevoy. The tough currency control measures triggered warnings of a foreign currency black market and echoed the draconian money restrictions that characterized the Soviet Union. Rates offered by banks and high street brokers are significantly worse, and a gap has also emerged between so-called “onshore” and “offshore” exchange rates - the ruble’s value in the Russian market and rates being offered abroad. The Russian currency dropped to new historic lows on the news, trading above 120 to the U.S.
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