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Russian Currency Rouble Crashes as market opens amid Heavy SWIFT Sanctions

Rouble crashes 30% as market opens

The rouble plunged nearly 30% to an all-time low versus the US dollar on Monday as markets opened for trading on the first day after western nations announced punishing economic sanctions on Russia for its invasion of Ukraine.

The rouble dropped to as low as 119 per dollar, and was last down 28.77% at 118 from its closing price 83.64 on Friday.

The sanctions include blocking some Russian banks from the Swift international payments system, leading investors to anticipate a run on the Russian currency as people try to change their money for dollars and other denominations.

“The escalating crisis in Ukraine will force markets to price in a substantially higher geopolitical risk premium,” strategists at the Australian bank Westpac said on Monday. “The Ukrainian situation is volatile.”

The outlook for the Russian economy is “dire”, according to one analyst, as the impact of western sanctions on Vladimir Putin’s regime began to be felt.

The rouble crashed more than 40% in value in early trading on Monday, slumping from 83.7 to the US dollar to 119.

A tough day looks in store for the Central Bank of Russia which has had its assets frozen as part of the sanctions and will be limited in how much it can support the currency.

“The situation is dire for the Russian economy,” said Christopher Vecchio, senior strategist with IG Group’s DailyFX.com in New York.

“Now unable to import or export goods and services thanks to the Swift sanctions, unable to sell foreign currency reserves thanks to the [central bank] asset freeze, and a Russian economy ringfenced from the global financial system, a currency crisis has emerged for Russia. High inflation is coming, as is an immediate lurch into recession.”

Other market moves include a 5% jump in Brent crude oil and a more losses on Asian stock markets where Putin’s raising of the nuclear threat has spooked investors.

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