Russian Ruble Crashes After SWIFT Cutoff Announcement

The Russian ruble crashed against both USD and Bitcoin (BTC) in the aftermath of the sweeping sanctions from western nations, and the cutoff of major regional banks from SWIFT.

After the markets opened on Monday, the dollar rose to over 108 rubles, compared to just 83 rubles the week prior. Bitcoin value is also going up – 1 BTC now costs 4,123,000 RUB at the time of writing – the highest price so far this year.

Demand for rubles is collapsing as western countries issue sanctions and trade restrictions on Russia. Also, EU committing to exclude selected Russian banks from SWIFT – the world’s largest international financial messaging system – has further darkened the outlook for ruble.

As a counter measure, the Bank of Russia has more than doubled its interest rate from 9.5% to 20%. The bank said:

“External conditions for the Russian economy have drastically changed. The interest rate increase would ensure a rise in deposit rates to levels needed to compensate for the increased depreciation and inflation risk”. 

“At the moment, the ruble is in a state close to free fall,” said Alex Kuptsikevich of FxPro in a report. “At some point in the coming days, we will see the limit of the fall of the ruble, from where it will begin its slow and difficult recovery. But it is hardly possible to pinpoint.”

Russian stocks also took a big hit. The main index on the Moscow Stock Exchange halting trading once automatic loss levels were hit. The central bank announced the stock market won’t even open on Tuesday.

Russian Sberbank that list in London lost 70 per cent of its share value, while shares in Gazprom lost more than a third.