The Russian ruble has lost as much as 25 percent of its value overnight, as financial sanctions were applied to Russia — including restrictions on access for some banks in Russia to the Society for Worldwide Interbank Financial Telecommunication global bank payments system — by a number of countries as part of the response to the invasion of Ukraine by military forces during the past week.
One Russian Ruble is Now Worth Less Than One United States Cent
The exchange rate at the time this article was written was that one Russian ruble was equivalent to 0.0098858951 United States dollars — which is less than one cent — or that one United States dollar was equivalent to 101.154 Russian rubles.
At one point earlier today, Monday, February 28, 2022, the ruble lost as much as 30 percent of its value from its close on Friday, February 25, 2022 — meaning that one United States dollar was equivalent to as many as 119.50 Russian rubles.
The sanctions are designed to restrict the central bank of Russia from access to greater than $600 billion in reserve funds, which adversely affects its ability to support the ruble…
…and the record decline of the ruble to its lowest level ever could lead to a substantially higher rate of inflation and significantly disrupt the economy in Russia, which would affect all citizens of the country and not solely elite members of Russian society who were the intended targets of earlier sanctions.
In response to the declining ruble, the key interest was rate more than doubled — from 9.5 percent to 20 percent — by the central bank of Russia in order to offset the increased risk of depreciation and inflation of the ruble. Also, 733 billion rubles — or approximately $8.78 billion in United States dollars — in local bank reserves would be freed to boost liquidity.
Final Boarding Call
Until the military invasion of Ukraine by Russia ends, the ruble will most likely continue to be pressured by sanctions which have been imposed by other countries worldwide — and the sanctions could get more restrictive before they are eventually eased…
Photograph ©2016 by Brian Cohen.
