The Russian ruble plummeted to a record low value Monday after Western countries announced sanctions on Russia as the nation’s invasion of Ukraine intensified, multiple sources reported.
The ruble tumbled as much as 29% as of Monday, dropping to as low as 111 against the U.S. dollar after Russian President Vladimir Putin put his nation’s nuclear arsenal on high alert and the U.S., Europe, U.K. and Canada introduced sanctions cutting off the country’s financial system from the west, the Financial Times reported.
The Bank of Russia increased its benchmark rates to 20% from 9.5% Monday to protect the country’s banking system, which was targeted by crippling Western sanctions, The Wall Street Journal reported. The Biden administration announced sanctions Monday against Russia’s central bank, prohibiting all transactions with Americans and freezing the bank’s assets in the U.S., CNBC reported.
“The economic reality has changed significantly,” Kremlin spokesperson Dmitry Peskov said, according to the WSJ.
“Now it’s important to take actions that minimize the consequences,” Peskov said. “We will do what is in our interests.”
The U.S., Europe and Canada agreed to cut off Russian banks from a global payment system, SWIFT, while the European Union cut off its airspace to Russian planes, CNBC reported. The group of allies also neutralized Russia’s $600 billion of foreign currency reserves and bared the Kremlin’s ability to shore the funds, protecting itself from further financial devastation, the WSJ reported.
“Put simply, Russia’s ability to transact with any financial institution at a global level will be severely impaired, because most international banks across any jurisdiction use Swift,” George Saravelos, an analyst at Deutsche Bank, said, according to the FT.
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