MOSCOW — The
ruble collapsed Monday, Russians sought to withdraw their savings and a
prominent tycoon urged an end to “state capitalism” in Russia as the country
reeled from the effects of Western sanctions over the Kremlin’s invasion of
Ukraine.
اضافة اعلان
President Vladimir Putin raged against the
West as he convened a meeting with officials including central bank chief
Elvira Nabiullina and the CEO of Russia’s largest lender Sberbank, German Gref,
to address what the Kremlin called a new “economic reality”.
“The Western community, which I called ‘the
empire of lies’ in my speech, is trying to implement sanctions against our
country,” he said.
The financial turmoil came on the first working
day after Western allies agreed on a new volley of financial sanctions,
including removing some Russian banks from the SWIFT bank messaging system, and
freezing central bank assets.
Billionaire Mikhail Fridman last week became
the first oligarch to speak out against Putin’s invasion of Ukraine and on
Monday fellow tycoon Oleg Deripaska said it was time to put an end to “state
capitalism” in Russia.
“It is necessary to end all this state
capitalism,” Deripaska said on messaging app Telegram.
“If this is a real crisis then we need real
crisis managers and not fantasists with a bunch of silly presentations,” said
the 54-year-old.
Billionaire Oleg Tinkov also spoke out
against war, saying countries should spend money on medicine and research and
not hostilities, while a spokeswoman for tycoon Roman Abramovich said he had
been involved in ending the Ukraine hostilities.
Ruble
in freefall
The
ruble fell sharply at the start of currency trading, reaching 100.96 to the
dollar, compared to 83.5 on Wednesday, the day before the invasion of Ukraine,
and 113.52 to the euro, compared to 93.5 before the assault.
This fluctuation came after the ruble-based
MOEX index increased the upper trading limit.
The ruble later rallied slightly to 98.6 to
the dollar and 108.7 to the euro.
Russia’s central bank announced that it would
not open trading in stocks at the Moscow Exchange on Monday “due to the
situation that has arisen”.
It said it would make an announcement about
trading for the next day by Tuesday morning.
The Kremlin acknowledged the impact, with
spokesman Dmitry Peskov saying that “the Western sanctions are hard, but our
country has the necessary potential to compensate the damage.”
The ruble had already fallen sharply against
the main world currencies due to the erupting conflict.
Many Russians queued at ATMs over the
weekend, seeking to withdraw ruble savings and exchange them for foreign
currency before rates plunged further.
In the second-largest city of Saint
Petersburg, some 20 customers waiting outside a branch of Raiffeisen Bank
Russia said they wanted to withdraw their cash.
‘No
trust in banks’
“We
went through all these cataclysms in 1998, so we have no trust in the
authorities or in banks,” said Anton Zakharov, 45.
He drew a parallel between the current situation
and Russia’s financial crisis in August 1998, when the government defaulted on
domestic debt and the ruble was devalued.
“It’s safer to keep it at home: we’ve no idea
what will happen now,” added Svetlana Paramonova, 58.
The Russian central bank on Monday took
emergency measures to prop up the economy, hiking the key interest rate to 20
percent from 9.5 percent to “support financial and price stability and protect
citizens’ savings from depreciation”.
This took the interest rate to a historic
high.
The Bank of Russia also banned brokers from
selling securities on behalf of foreign clients.
As part of a flurry of measures, the finance
ministry announced that Russian resident companies that earn income from
exports from Monday will have to sell 80 percent of their foreign currency
earnings.
“The ratcheting up of Western sanctions over
the weekend has left Russian banks on the edge of crisis,” said Capital
Economics.
Alexei Vedev, a financial analyst at Moscow’s
Gaidar Institute for Economic Policy, praised the central bank for “acting
rationally” to reduce uncertainty.
“The introduction of restrictions by the
central bank, the finance ministry and the Moscow stock exchange lowers
volatility,” he told AFP.
He added that the Russian financial system will change
due to sanctions, in a way that will “become clear later, when the geopolitical
situation becomes clear”.
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