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NZ
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Highlights
- From SWIFT ban to the central bank freeze, a host of measures were announced to paralyse Russia.
- Banks and corporates have halted their operations in Russia, creating chaos that the country has never witnessed before.
- Russian stocks, bond and currency markets were seen tumbling on Monday with its central bank shutting the stock market to avoid an expected selloff.
Modern warfare is not limited to military attacks, bombs, and missiles but more than that. The Russian invasion has made clear that high finance is a more prominent weapon to send an economy crippling. Over the weekend, we saw the West imposing economic penalties on Russia one after the other. From SWIFT ban to the central bank freeze, a host of measures were announced to paralyse Russia.
Economic sanctions as a weapon against Russia
Though it was Russia, which initiated the act of invasion against Ukraine, the country now finds itself cornered from all sides now, being bombarded with sanctions. Western governments did not hesitate to propose banning Russia from SWIFT. Banks and corporates have halted their operations in Russia, creating chaos that the country has never witnessed before. The country is unplugged from the global system, making the governor of the Russian central bank accept that they are facing a totally abnormal condition.
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Russian stocks, bond and currency markets were seen tumbling on Monday with its central bank shutting the stock market to avoid an expected selloff. The Russian central bank raised benchmark interest rates to 20% from 9.5%, in a move to hold its currency. The ruble fell to 108.014 against the US dollar from 83 on Friday—a drop of more than 20% and its worst one-day decline since Sept. 3, 1998. Russian stocks are also facing the heat of the sanctions with energy giants like Gazprom and the country’s largest lender Sberbank witnessing a major fall on Monday. The Russian stock markets remained closed for trading on Tuesday.
There is chaos everywhere, and Russians are the most impacted. Putin’s strategy of Fortress Russia seems to be going down the drain as the West has imposed sanctions one after the other, giving no time for Russia to breathe. The pressure is enormous, and it is going to get a lot bigger if Putin continues with his move to invade Ukraine.
The Russian economy was struggling with higher inflation, and the current mayhem could send its economy crumbling. The Russian-Ukraine war is making Russians face the heat, and with the current economic sanctions, they will keep struggling for years to come out of the chaos. From Russian oligarchs to the common man, all seem to be on the radar of the West.
Will Putin stop?
Russian President Vladimir Putin is being compared to Hitler and there are reasons for the same. He is moving at his pace and does not seem to pay heed to any of the warnings. He is striking back at the West. Issuing restrictions on foreign exchange loans to blocking international transfers, Putin is going all out to strike back with high finance; but will these be enough? Corporate majors like BP Plc, Daimler Truck Holding, Volvo Car, Shell and many others have already made a move to exit Russian operations and businesses. There are many more to come if the war doesn’t take a back seat. But the question is will these moves make Putin stop? China, Russia’s only friend at this moment, also seems to be not willing to bail out Russia as it could risk its own access to the U.S. and European markets. With the world on one side and Russia on the other, the Russian-Ukraine war is likely to intensify further in the days to come.
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