Russians awoke to an economy in shambles on Monday as an overwhelming wave of western sanctions over the Ukraine invasion began to bite.
The ruble lost nearly 30% of its value against the dollar and trading on the Russian stock market was delayed and then scrapped altogether.
Conditions forced Russia’s central bank to hike interest rates to 20% from 9.5%, according to CNN.
“External conditions for the Russian economy have drastically changed,” the bank said. “This is needed to support financial and price stability and protect the savings of citizens from depreciation.”
“Due to the current situation, the Bank of Russia has decided not to open a stock market section, a derivatives market section, or a derivatives market section on the Moscow Exchange today,” it said.
There were media photos of Russians lining up to withdraw cash from ATMs over the weekend and the European subsidiary of Sberbank, Russia’s biggest lender, faced failure after a run on deposits.
President Vladimir Putin planned to hold emergency meetings with economic advisers as the Kremlin gets a real-life taste of whether its “fortress economy” can hold up against major sanctions against its central bank and the Group of Seven nations’ decision to cut it off from the SWIFT financial messaging system.
“The economic reality has, of course, changed,” Kremlin spokesman Dmitri S. Peskov told reporters.
Mr. Putin had dubbed the sanctions “illegitimate” and put his nuclear deterrent forces on alert Sunday.
Western nations are squeezing Moscow as Russian forces continue an invasion of Ukraine. Forces are threatening major cities such as Kharkiv and Kyiv, which have held so far.
The U.S. and Western powers clamped down further Monday by restricting Moscow’s ability to tap into the bulk of its $640 billion in foreign currency reserves.
Underscoring western disgust with the situation, Switzerland decided to waive its commitment to neutrality and back sanctions against Russia.
“The Swiss Federal Council has decided today to fully adopt EU sanctions,” Swiss Federal President Ignazio Cassis said during a news briefing. “It is an unparalleled action of Switzerland, who has always stayed neutral before.”
“Russia’s attack is an attack on freedom, an attack on democracy, an attack on the civil population, and an attack on the institutions of a free country,” Mr. Cassis said. “This cannot be accepted regarding international law, this cannot be accepted politically, and this cannot be accepted morally.”
JPMorgan Chase & Co., estimating the fallout Monday morning, said Russia’s economy will likely enter a recession.
“We believe Russia’s growing political and economic isolation will curtail Russia’s growth potential in years to come and lower Russia’s trend growth to 1.0%, down from 1.75% previously,” JPMorgan forecasters said.
• Tom Howell Jr. can be reached at thowell@washingtontimes.com.
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