Rouble climbs off the record low
The Russian central bank has purchased millions of roubles to prevent the Moscow stock exchange from collapsing and to support the currency, which has dropped to an all-time low of 89.60 per dollar.
In an attempt to prevent the invasion of Ukraine from causing a meltdown in Russia’s financial system, officials in Moscow closed the stock exchange. At the same time, the Bank of Russia mounted a rescue operation to put a floor under the tumbling rouble. The stock market had reopened by midday, and the rouble had recovered to trade at 84 to the dollar. However, it had climbed back to 87 late in the day, prompting analysts to warn that an escalation of the war could force the central bank to intervene further to prevent the currency from falling even lower.
After reopening, Russia’s leading stock exchange dropped 30%, dropping from 3,000 to 2,000 points, while the MSCI index of shares in Russian companies traded in London and New York fell by 45 percent.
After weeks of denying any plans to attack Ukraine, Russian forces launched missiles at several Ukrainian cities. They landed troops on the country’s coast, prompting analysts to predict that severe pressure on global financial markets would likely continue in the coming weeks.
The IMF has committed more than $20 billion in loans to Ukraine in a series of bailouts since 2014. However, in 2019 it demanded that Volodymyr Zelenskiy’s government demonstrate that it would aggressively seek to recoup an estimated $15 billion stolen from more than 100 banks, including the country’s largest, PrivatBank, over the previous decade before releasing a further $4 billion.
The Russian central bank expected to ease further pressure on the rouble by raising its primary interest rate in the hope of luring back foreign investors looking for high returns.
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