Ukraine conflict: Russian rouble plunges after new sanctions announced
28-02-2022, 10:20

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The rouble has slumped by 30% against the US dollar, after Western nations announced new sanctions against Russia over its invasion of Ukraine.

The new record low for the Russian currency comes after some of the country's banks were banned from using the Swift international payment system.

On Sunday, Russia's central bank appealed for calm amid fears that there could be a run on the country's banks.

Growing tensions also helped push Brent crude oil above $100 (£75) a barrel.

The move by the European Union, United States and their allies to cut off a number of Russian banks from Swift is the harshest measure imposed to date on Moscow over the Ukraine conflict.

The assets of Russia's central bank will also be frozen, limiting the country's ability to access its overseas reserves.

The intention is to "further isolate Russia from the international financial system", a joint statement said.

Russia is heavily reliant on the Swift system for its key oil and gas exports.

"Unless the Russian central bank and Russia's largest banks - which have already been cut off from correspondent banking - find an alternative means of reaching the global financial system Russia faces Iran and North Korea-style isolation from the global economy," Ari Redbord from blockchain analytics firm TRM Labs told the BBC.

Mr Redbord was formerly at the US Treasury Department, where he was a senior advisor to the Under Secretary for Terrorism and Financial Intelligence.

"Financial markets are guided by the unfolding of events in Ukraine," said Katrina Ell, an economist at Moody's Analytics in Sydney.

"Announcements regarding sanctions and military action will remain market movers this week," she told the BBC.

Last week, Moody's said it was reviewing Russian bonds to possibly downgrade them to '"junk", which would put Russia in a league of riskier countries that usually have to pay more to borrow. Rival credit ratings agency S&P has already lowered the country to junk status.

At the weekend, Russia's central bank issued an appeal for calm amid fears that the new financial sanctions could spark a run on its banks.

It said it "has the necessary resources and tools to maintain financial stability and ensure the operational continuity of the financial sector".

 

BBC

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