The Russian currency, ruble, was down as much as 30% on the dollar this week, as distressing scenes continue to come out of Ukraine following the Russian invasion. On behalf of everyone at Zenfinex, our thoughts go out to those most affected by the unnecessary conflict seen in Ukraine. We hope for a peaceful solution as soon as possible. For today’s video though I am going to analyse what has happened to the ruble currency following the invasion.
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Last week Zenfinex put together a forecast video that explained the impact of a full-scale Russian invasion of Ukraine on the key financial markets so make sure you check that out. To provide an update, last night saw more heavy shelling in Ukraine. Distressing videos have been shared on social media of residential buildings being struck by missiles, unfortunately, more civilians have been killed. There is a slimmer of hope at the moment as peace talks began yesterday. There are obvious concerns that both parties are way off agreeing with each other. Russia wants Ukraine to essentially surrender and be demilitarised, whereas Ukraine wants Russia to cease fire immediately.
So, what’s the latest with the Russian currency, the ruble? Well, the ruble was worth less than 1 U.S cent after falling as much as 30% this week already. In Russia, there were real concerns of an economic meltdown after the long list of sanctions, mainly financial, placed on them by the west. The sanctions range from blocking Russian banks from settling payments and freezing the assets of the wealthiest Russian individuals. This has caused a spiral effect down to the customers, who were seen rushing to withdraw their deposits from banks.
What has been the response? Well, in order to avoid this financial meltdown, Russian President Vladimir Putin was forced into crisis talks with his economic advisers. The solution to the meeting was the Russian central bank more than doubling interest rates, from 9% to 20%. The Moscow stock exchange remains shut since Monday. Although the initial interest rate hike halted the rapid meltdown of the ruble, it is unlikely to be enough as Russia’s economy remains under a severe attack. This has only caused a pause in the fall so far.
To conclude this has really has rattled the markets as you will see on the chart soon. Russia doubling its interest rate to 20% has caused a pullback on the USD/RUB chart. However, Russia is likely to remain uninvestable so their currency as a whole is likely to remain weak, and who knows how far this could go.
00:00 - Intro
00:34 - Russia Invasion Update
01:43 - The Ruble Tumbles
02:34 - Russia Response
03:17 - The End of the Ruble?
03:37 - USD/RUB Chart
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