Russia announces measures to contain ruble fall

Russian President Vladimir Putin on Monday lashed out at sanctions imposed by what he called the Western “empty of lies” in response to the invasion of Ukraine, and announced drastic measures to stem the ruble’s fall.

According to a decree published on the Kremlin’s website, Russian residents will be banned from transferring money abroad from this Tuesday. In addition to this first measure, Russian exporters will be obliged, as of today, to convert 80% of their foreign currency income earned since January 1 into rubles.

The ruble fell to historic lows on Monday since the opening of trading, and closed at 94.6 to the dollar, compared to 83.5 before the invasion of Ukraine.

To defend the national economy and currency from the impact of Western sanctions, Russia’s Central Bank announced in a statement on Monday that it would raise its benchmark interest rate by 10.5 percentage points to 20%.

The United States, the European Union and other countries have announced that they will exclude some Russian banks from the Swift international bank payment system and from any transactions with the Central Bank of Russia. Commercial reprisal measures were also announced, such as the closing of airspace to Russian planes across Europe.

Russian TV showed footage of a meeting between Putin, Prime Minister Mikhail Mishustin, Finance Minister Anton Siluanov, Russian Central Bank President Elvira Nabiullina and the director general of the country’s largest bank, Sberbank, to respond. to sanctions.

Kremlin spokesman Dmitry Peskov acknowledged earlier that the Western powers’ sanctions were “harsh” and posed a “problem”, but that Russia had “all the potential necessary to compensate for the damage”. The Kremlin has not announced any additional measures in response to the sanctions.

“The measures taken reduce volatility,” Alexei Vedev, an analyst at the economic institute Gaïdar, told AFP. “Uncertainty is huge and the central bank is acting rightly,” he added.

worried tycoons

In a rare reaction, Russian tycoons have publicly expressed their displeasure.

“It’s a real crisis and real crisis experts are needed. We must absolutely change economic policy and put an end to all this state capitalism,” Oleg Deripaska, a billionaire creator of aluminum giant Rusal, posted on the Telegram messaging app. He said he expected from the government “clarifications and clear comments on economic policy for the next three months.”

For Sergei Khestanov, macroeconomic advisor at Open Broker, Russia still has room. “As long as there are no real sanctions on Russian exports, especially oil and gas, there will be no catastrophe,” he said, although “people, of course, will feel” the effects.

Concerned, some Russians preferred to withdraw their savings from the bank. That was the case for Svetlana Paramonova, 58, who wants to withdraw all her money “to keep it at home. It’s safer, as we no longer understand what happens.”