The ruble fell to record lows against the dollar and the euro on Monday during trading, due to the sanctions imposed by Western countries for the Russian invasion of Ukraine and the stock market remained closed.
The ruble was trading at 100 per dollar on Monday, down from 83.5 on Wednesday, the last day an official exchange rate was recorded, before the invasion of Ukraine. Against the euro, the Russian currency was trading at 109.4 per euro against a previous level of 93.5.
The exchanges were suspended after having crossed the limits that the operation allows.
To defend the national economy and currency against Western sanctions, the Central Bank of Russia announced this Monday in a statement that it will raise its reference interest rate by 10.5 percentage points, taking it to 20 percent.
The regulator indicated before its opening that it established limits -90 rubles for one dollar and 101.19 rubles for one euro-, beyond which the exchanges would stop. These tops were reached in the first seconds of the session.
“The Board of Directors of the Bank of Russia decided to raise the reference rate to 20% per annum,” the monetary institution said, quoted by Russian news agencies.
“The Bank of Russia will make new decisions on the Reference rate based on an assessment of the risks associated with external and internal conditions and the response of financial markets to these risks,” added the institution, which is trying to defend the ruble that has fallen sharply since the beginning of the Russian invasion of Ukraine.
The United States, the European Union and other countries have announced that they will exclude certain Russian banks from the Swift international bank payment system and from any transactions with the Russian central bank.
The G7 countries – the United States, Canada, France, Germany, Italy, Japan, Great Britain – have warned that they will take “additional measures” in addition to the sanctions already announced if Russia does not cease its military operations. Before Western sanctions and the invasion of Ukraine, inflation was already skyrocketing in Russia, forcing the central bank to raise its benchmark rate several times.
Facing the trend, the authorities kept the stock market closed, fearing a nosedive in shares of Russian companies.
On the streets of Moscow and St. Petersburg, Russians expressed concern about their savingsalthough there was not an avalanche of clients in the branches trying to withdraw their deposits, but there was a larger flow.
“I knew there would be people, I want to withdraw cash, saving at home is safer, you don’t know what’s going to happen,” said Svetlana Paramonova, 58, in St. Petersburg.