The Russian rouble fell to a record low today (28 February) following the imposition of more Western sanctions and Vladimir Putin’s decision to put Russia’s nuclear forces on “special alert”.
The rouble, now valued at just shy of one US cent, dropped by nearly 30 per cent as markets opened, recovering somewhat as Russia tightened trading conditions. Western countries have banned selected Russian banks from Swift, the global financial messaging system, and imposed sanctions on the Russian central bank, preventing it from using its foreign currency reserves to support the rouble.
Russia’s central bank has more than doubled its interest rate -- from 9.5 per cent to 20 per cent -- in an attempt to protect its currency from depreciation. “External conditions for the Russian economy have drastically changed,” the bank said in a statement. "The increase of the key rate [is] needed to support financial and price stability and protect the savings of citizens from depreciation." Many Russians fear their savings may be wiped out, and videos of long queues at cash machines have started circulating on social media.
The crash has sent ripples across global markets as well, with oil prices surging, stocks falling and demand for sovereign bonds remaining high.