News report

Russia bans residents from transferring money overseas as ruble slumps

Russian President Vladimir Putin on Monday ordered a ban on foreign currency lending and transfers outside the country by citizens as the Russian currency faced a massive collapse following strict economic measures imposed by the West in Moscow in response to the invasion of Ukraine. According to reports, from March 1, Putin also signed a bill ordering all exporting companies to sell 80% of their foreign exchange earnings earned since January 1 in the market. This came after Putin and his cabinet met with the heads of the country’s largest private bank, Sberbank, and the Central Bank of Russia (CBR).

Notably, the decision came the same day the UK government announced sanctions against the CBR in a bid to “further isolate Russia”. Additionally, UK Foreign Secretary Liz Truss has also informed that Downing Street will also exclude Sberbank from sterling clearing and impose sanctions on three other banks. As the new round of financial bans on Moscow were declared yesterday, the UK announced it would freeze the assets of all Russian banks in the coming days.

Ruble plunges as Russia sanctions hit global market

Crushing sanctions imposed by the West over the weekend forced Russia to rush into an unprecedented financial meltdown on Monday. According to CNN Business, as Putin held crisis talks with his financial experts, Russia’s currency, the ruble, faced a freefall against the US dollar. The ruble lost about 25% of its value to trade at 104 to the dollar at 12:15 p.m. Monday, after facing a 40% free fall earlier. As a result, the CBR doubled interest rates to 20% on Monday while the Moscow Stock Exchange was closed for the day remaining closed for today as well (Tuesday March 1).

Meanwhile, the European branch of Russia’s biggest bank was on the verge of collapse as savings account holders rushed to withdraw their deposits. Financial experts predicted on Monday that the subsequent fall could lead to a contraction of the Russian economy by at least 5%. The sudden drop came as the United States, United Kingdom, European Union and Canada unleashed a barrage of sanctions and a warning to terminate Russian banks from SWIFT (a global financial messaging service), aimed at “crippling” Russia’s ability to invest in weapons of war.

Russia–Ukraine War

The developments come against the backdrop of the full-fledged war between Russia and Ukraine. On Tuesday, the Russian armed forces continued to shell Ukrainian territories, targeting schools, hospitals, mobile medical aid brigades and ambulances, Ukrainian envoy to the UN Sergiy Kyslytsya said, which his Russian counterpart Vasily Nebenzya denied. Meanwhile, Russian and Ukrainian delegates held the first round of peace talks in Belarus, the first time since Putin ordered an “unprovoked” invasion of Ukraine.

The discussion came as Putin announced on Sunday that he had kept nuclear deterrent forces on high alert. Meanwhile, Ukrainian President Volodymyr Zelensky on Monday signed an application to join the European Union (EU), a step that is expected to further infuriate Moscow. The now 6-day war has killed 352 civilians, including 14 children, and injured more than 1,600, including 116 children in besieged Ukraine, the country’s health ministry has informed.

(Image: AP/PTI)