{"id":601547,"date":"2022-02-28T14:02:10","date_gmt":"2022-02-28T18:02:10","guid":{"rendered":"https:\/\/www.malayalamdailynews.com\/?p=601547"},"modified":"2022-02-28T14:02:10","modified_gmt":"2022-02-28T18:02:10","slug":"sanctions-against-russia-make-people-life-miserable-the-ruble-plummets-sharply","status":"publish","type":"post","link":"https:\/\/www.malayalamdailynews.com\/english\/601547\/","title":{"rendered":"Sanctions against Russia make people life miserable; The ruble plummets sharply"},"content":{"rendered":"

\"\"MOSCOW | Western sanctions following the occupation of Ukraine caused the Russian currency ruble to fall sharply. As a result, the lives of ordinary people are becoming unbearable.\u00a0The Russian currency plunged about 30% against the U.S. dollar after Western nations announced moves to block some Russian banks from the SWIFT international payment system and to restrict Russia\u2019s use of its massive foreign currency reserves. The exchange rate later recovered ground after swift action by Russia\u2019s central bank.<\/p>\n

But the economic squeeze got tighter when the U.S. announced more sanctions later Monday to immobilize any assets of the Russian central bank in the United States or held by Americans. The Biden administration estimated that the move could impact \u201chundreds of billions of dollars\u201d of Russian funding.<\/p>\n

Biden administration officials said Germany, France, the UK, Italy, Japan, European Union and others will join the U.S. in targeting the Russian central bank.<\/p>\n

Tyler Kustra, an assistant professor of politics and international relations at the University of Nottingham, said he couldn\u2019t recall a similar example from the past of an economy brought to its knees by global sanctions.
\n\u201cThis is the West causing a currency crisis for Russia,\u201d said Kustra, who studies economic sanctions.<\/p>\n

Russians wary that sanctions would deal a crippling blow to the economy have been flocking to banks and ATMs for days, with reports in social media of long lines and machines running out. People in some central European countries also rushed to pull money from subsidiaries of Russia\u2019s state-owned Sberbank after it was hit with international sanctions.<\/p>\n

Moscow\u2019s department of public transport warned city residents over the weekend that they might experience problems with using Apple Pay, Google Pay and Samsung Pay to pay fares because VTB, one of the Russian banks facing sanctions, handles card payments in Moscow\u2019s metro, buses and trams.<\/p>\n

A sharp devaluation of the ruble would mean a drop in the standard of living for the average Russian, economists and analysts said. Russians are still reliant on a multitude of imported goods and the prices for those items are likely to skyrocket, such as iPhones and PlayStations. Foreign travel would become more expensive as their rubles buy less currency abroad. And the deeper economic turmoil will come in the coming weeks if price shocks and supply-chain issues cause Russian factories to shut down due to lower demand.<\/p>\n

\u201cIt\u2019s going to ripple through their economy really fast,\u201d said David Feldman, a professor of economics at William & Mary in Virginia. \u201cAnything that is imported is going to see the local cost in currency surge. The only way to stop it will be heavy subsidization.\u201d<\/p>\n

Russia has moved to produce many goods domestically, including most of its food, to shield the economy from sanctions, Kustra said. He expected that some fruits, for example, that can\u2019t be grown in Russia \u201care going to be suddenly much more expensive.\u201d<\/p>\n

Electronics will be a pain point, with computers and cellphones needing to be imported and the cost going up, Kustra said. Even foreign services like Netflix might cost more, though such a company could lower its prices so Russians could still afford it.<\/p>\n

The Russian government will have to step in to support declining industries, banks and economic sectors, but without access to hard currencies like the U.S. dollar and euro, they may have to resort to printing more rubles. It\u2019s a move that could quickly spiral into hyperinflation.<\/p>\n

The ruble slide recalled previous crises. The currency lost much of its value in the early 1990s after the end of the Soviet Union, with inflation and loss of value leading the government to lop three zeros off ruble notes in 1997. Then came a further drop after a 1998 financial crisis in which many depositors lost savings and yet another plunge in 2014 due to falling oil prices and sanctions imposed after Russia seized Ukraine\u2019s Crimea peninsula.<\/p>\n

Russia\u2019s central bank immediately moved to try to halt the slide of the ruble. It sharply raised its key interest rate in a desperate attempt to shore up the currency and prevent a run on banks. It also said the Moscow stock exchange would remain closed Monday.<\/p>\n

The bank hiked the benchmark rate to 20% from 9.5%. That followed a Western decision Sunday to freeze Russia\u2019s hard currency reserves, an unprecedented move that could have devastating consequences for the country\u2019s financial stability.<\/p>\n

It was unclear exactly what share of Russia\u2019s estimated $640 billion hard currency pile, some of which is held outside Russia, would be paralyzed. European officials said at least half of it will be affected.<\/p>\n

That dramatically raised pressure on the ruble by undermining financial authorities\u2019 ability to support it by using reserves to purchase rubles.<\/p>\n

Kremlin spokesman Dmitry Peskov described the sanctions that included a freeze on Russia\u2019s hard currency reserves as \u201cheavy,\u201d but argued Monday that \u201cRussia has the necessary potential to compensate the damage.\u201d<\/p>\n

The steps taken to support the ruble are themselves painful because raising interest rates can hold back growth by making it more expensive for companies to get credit. Russians who have borrowed money, such as homeowners with mortgages or business owners who have taken out loans, could also get hit by the central bank\u2019s decision to double interest rates, Kuskra said.<\/p>\n

The central bank ordered other measures to help banks cope with the crisis by infusing more cash into the financial system and easing restrictions for banking operations. At the same time, it temporarily barred non-residents from selling the government obligations to help ease the pressure on the ruble from panicky foreign investors trying to cash out of such investments.<\/p>\n

The ruble sank about 30% against the U.S. dollar early Monday but steadied after the central bank\u2019s move. Earlier, it traded at a record low of 105.27 per dollar, down from about 84 per dollar late Friday, before recovering to 94.43.<\/p>\n

Sanctions announced last week had taken the Russian currency to its lowest level against the dollar in history.
\n(AP)<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

MOSCOW | Western sanctions following the occupation of Ukraine caused the Russian currency ruble to fall sharply. As a result, the lives of ordinary people are becoming unbearable.\u00a0The Russian currency plunged about 30% against the U.S. dollar after Western nations announced moves to block some Russian banks from the SWIFT international payment system and to restrict Russia\u2019s use of its massive foreign currency reserves. The exchange rate later recovered ground after swift action by Russia\u2019s central bank. But the economic squeeze got tighter when the U.S. announced more sanctions later…<\/p>\n","protected":false},"author":8,"featured_media":601551,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[47748],"tags":[],"class_list":["post-601547","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/www.malayalamdailynews.com\/english\/wp-json\/wp\/v2\/posts\/601547","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.malayalamdailynews.com\/english\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.malayalamdailynews.com\/english\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.malayalamdailynews.com\/english\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.malayalamdailynews.com\/english\/wp-json\/wp\/v2\/comments?post=601547"}],"version-history":[{"count":0,"href":"https:\/\/www.malayalamdailynews.com\/english\/wp-json\/wp\/v2\/posts\/601547\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.malayalamdailynews.com\/english\/wp-json\/wp\/v2\/media\/601551"}],"wp:attachment":[{"href":"https:\/\/www.malayalamdailynews.com\/english\/wp-json\/wp\/v2\/media?parent=601547"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.malayalamdailynews.com\/english\/wp-json\/wp\/v2\/categories?post=601547"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.malayalamdailynews.com\/english\/wp-json\/wp\/v2\/tags?post=601547"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}