Russian ruble now worth less than 1 US cent, 1 Bangladeshi taka

Russian central bank more than doubled its main policy interest rate to 20 percent on Monday to support the plunging ruble.

However, experts say it won’t be enough given Moscow has a dearth of palatable policy options.

The ruble fell as much as 23 percent against the dollar at the first chance traders had to react to some Russian banks’ imminent ejection from the SWIFT payments system, reports Reuters.

On the other hand, one ruble also fell less than one Bangladeshi Taka on Tuesday.

The western restrictions on central bank reserves also played a role, the Reuters report adds.

Those sanctions shattered the impression that Moscow had large enough economic buffers to withstand whatever the US and its Western allies might throw its way.

Central bank boss Elvira Nabiullina said Russia’s internal payments system can connect to international alternatives to SWIFT. But that won’t make overseas counterparties any less ruble-averse. She could hike rates a lot higher, but that would hurt a damaged economy, Reuters adds.

 

People stand in line to use an ATM money machine in Saint Petersburg, Russia February 27, 2022. Photo: Reuters

Ramping up capital controls is another option. She has already ordered any attempt by foreigners to sell Russian securities to be rejected. But banning ruble sales outright would paralyse importers, the report further explains.

Meanwhile, as markets opened in a panic on Monday, many Russians rushed to local cashpoints in Moscow to retrieve their savings before the damage got any worse, reports The Guardian.

“It said they had dollars so I came here immediately,” The Guardian reports quoting Alexei Presnyakov (32). He was pointing to an app for Russia’s Tinkoff Bank, indicating he could withdraw hard currency. About 20 people were queued in line. “Yesterday [the rate] was 80 [to the dollar]. Today it’s 100. Or 150,” Alexei said.

From shopping malls to corporate boardrooms, Russians were trying to find their footing in what the Kremlin described as the “altered economic reality” that the country was now facing following sanctions on Russia’s Central Bank and other key financial institutions.

There were signs that something extraordinary was taking place: the Moscow Exchange, Russia’s largest stock market, has halted trading until 5 March, The Guardian added.

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