Russians Ditch Ruble, Central Bank Scrambles as Fiat ‘Destruction’ Looms
Reports on social media claim that citizens in Russian have been spending their cash on luxury items, electronics, and other goods in a bid to dump the ruble before the markets reopen today.
A Moscow Times journalist claimed that the “mood” was similar to 2014, when the Russian markets were last rocked by sanctions.
After the Western allies gave their blessing to a SWIFT banking network ban on Russia over the weekend, the Russian fiat dropped some 26% against the USD to 105.27 per dollar – a fall of 84 per dollar on Friday’s trading and an all-time low against the greenback.
The economist Steve Hanke noted that the currency had depreciated “by as much as 47% against the USD” since the start of the year, adding:
”Conflict in Eastern Europe is fueling the currency's destruction. At present, I measure Russia’s inflation at 69.4% per year.”
The ruble has recovered slightly and the Chairman of the Silverado Policy Accelerator Dmitri Alperovitch wrote:
“The impact of upcoming economic collapse in Russia cannot be overstated. This is not 2014.”
The Russian Central Bank has been attempting to fight the economic fire by almost doubling interest rates from their previous rate of 9.5% to 20%, Tass reported. It has also announced that it will be freeing up USD 8.78bn worth of local bank reserves in a bid to bolster liquidity. The bank claimed that the rate rise would help boost the attractiveness of ruble deposits.
The Central Bank added, again per Tass, that “further decisions on the key rate will be made based on an assessment of risks from external and internal conditions and the reaction of financial markets.”
The Central Bank says it will make an announcement at 4 PM local time, with markets currently set to open at 3 PM, although this
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