The Russian Economy Suffers as Currency Falls and Rates Rise

According to U.S. authorities, sanctions imposed by the U.S. and other states have damaged Russia’s economy in the previous 24 hours by freezing approximately half of the country’s central bank assets. Russians have been hurrying to spend their rubles while withdrawing dollars, euros, and other currencies from banks as the value of their local currency has plummeted as a result of the U.S. sanctions.

The U.S. sanctions follow a rising push to exclude Russian banks from the SWIFT global payments system. This financial messaging infrastructure connects the world’s largest institutions. According to U.S. Treasury Department spokesperson Lily Adams, preventing Russian banks from accessing the system stifles cross-border funding; it is important to a modern economy, including commerce, foreign investments, and central banking assistance.

Sanction Impact on Civilians

However, as markets sort out the high-level effects of sanctions, ordinary Russians already feel the pinch. Many people have flocked to ATMs; they’re waiting in long lines in the hopes of withdrawing cash before they run out of money to buy groceries and other needs. Moscow’s public transportation administration advised people over the weekend that using Apple Pay, Google Pay, or Samsung Pay to pay for fares might cause issues; this is because VTB Bank, one of the Russian banks targeted by international sanctions, handles payments in the city.

The United States and its allies essentially cut off Moscow’s access to dollars, euros, and yen; they did this by limiting the Russian government’s access to its overseas bank accounts. As a result, any Russian citizen’s capacity to acquire products not sold in rubles is severely limited.

Foreign travel is substantially more difficult due to Russian airline limitations and foreign carriers’ refusal to take rubles as payment. Suppose, Russian President Vladimir Putin refuses to bow to international pressure to cease the invasion. In that case, the country’s factories and manufacturers may have to collapse due to blocked trade channels.

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