The Russian ruble fell nearly 29% once morest the dollar on Monday morning to an all-time low as markets assessed the impact of sanctions on Russia amid a growing backlash once morest the Kremlin’s invasion of Ukraine, following Western nations announced Major Russian banks isolated from Swift network.
The ruble traded as low as 119 per dollar as foreign trade began in the morning during Asian hours, from around 84 per dollar the day before.
On Monday, the Russian Central Bank confirmed that it had prevented its brokers from executing sales orders from foreigners as it sought to contain financial market fallout. He also said he would free up 733 billion rubles ($8.78 billion) from the reserves of local banks to boost liquidity.
This came at a time when the Russian-Ukrainian crisis shows no sign of abating.
Russians queued in front of ATMs across the country to withdraw foreign currency, following fears that the ruble would collapse due to the war on Ukraine.
The scramble for foreign currencies came despite some banks selling dollars at a price a third higher than last Friday’s market closing price, well above the psychologically important 100 rubles per dollar barrier, which many economists said might prompt an interest rate hike by the Bank of Russia. central.
The United States, the European Union and Canada agreed on Saturday to remove major Russian banks from the SWIFT system, the acronym for the Association for Worldwide Interbank Financial Communications, which connects more than 11,000 financial institutions operating in more than 200 countries and territories, and is the most powerful financial weapon in the world. It might punish a country, cutting the country off from a large part of the global financial system.
“This will ensure that these banks are disconnected from the global financial system and harm their ability to operate globally,” the coalition of world powers wrote in a joint statement announcing the major retaliatory action.
Russia’s exclusion from the SWIFT system means that its banks will not be able to communicate securely with banks outside its borders, the same punishment that was imposed on Iran in 2014 following developments in Tehran’s nuclear program.
For its part, the International Financial Communications Association “SWIFT” announced that it is preparing to implement financial sanctions on Russian banks.
And it indicated in a statement, today, Sunday, according to what Archyde.com reported, that it is in talks with European authorities in order to determine the Russian entities and banks that will be subject to the new procedures.
In addition, the United States and its allies have announced that they will impose restrictive measures aimed at preventing the Russian Central Bank from using its international reserves in ways that might tighten sanctions.
In a related context, the Russian Central announced that it will resume buying gold in the local markets.
The President of the European Commission said that sanctions once morest Russia will have repercussions on Europe.