Russian Ruble Plummets Nearly 30% Since Western Sanctions... "Geopolitical Crisis Deepens" (Update)

Ruble Plummets to 119 per Dollar... 28.77% Drop
Further Decline Expected Amid SWIFT Exclusion and Prolonged War Concerns

[Image source=EPA Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] The Russian market, which opened for the first time after the West's announcement of strong financial sanctions, saw the value of the ruble plunge by nearly 30%. This is interpreted as concerns spreading that Russia's economic damage will increase due to the financial shock following the passage of the Western countries' sanctions on the Society for Worldwide Interbank Financial Telecommunication (SWIFT) and the growing fears that the Ukraine war will prolong longer than expected.

According to the UK Guardian on the 28th (local time), the ruble started trading at 119 rubles per dollar, a sharp drop of 28.77% from the previous day's closing price, in the market that opened for the first time after the Western sanctions. The ruble had already fallen nearly 20% in pre-market trading, setting a new all-time low, and the decline widened further immediately after the market opened.

At the G7 summit held the previous day, Western countries announced sanctions excluding major Russian banks from SWIFT. SWIFT is a non-profit organization operating the payment system necessary for international financial transactions in US dollars. It is headquartered in Belgium and has over 11,500 financial institutions in more than 200 countries as members. Since SWIFT codes are applied when individuals send money overseas, being expelled from this payment network effectively makes international financial transactions impossible.

The Guardian reported that due to the SWIFT sanctions, investors are expected to avoid Russian currency when trying to exchange into currencies like the dollar, which is anticipated to further lower the ruble's value. Strategists at Australia's Westpac Bank added, "As the Ukraine crisis intensifies, the market will increase the geopolitical risk premium." Due to the ruble's sharp decline, it is reported that a so-called 'bank run' is underway in Russia, with people lining up to withdraw cash from banks.

As the ruble's value falls, prices of imported goods and services are soaring, raising concerns that inflation will worsen. Iikka Korhonen, head of emerging economies research at the Bank of Finland, warned, "If the Russian central bank cannot intervene to support the currency's value, this could cause significant uncertainty."

This content was produced with the assistance of AI translation services.