Russian economy declines by 30% after West imposes sanctions; long

Washington: The effects of the harsh sanctions imposed by the western countries against Russian President Vladimir Putin and the Russian central bank are becoming visible. Within 24 hours of the imposition of sanctions, there was a record decline in the Russian economy and the value of its currency Ruble. Reports have been published that long, serpentine queues were seen outside ATMs to withdraw money from the banks. The central bank had announced a significant rise in the interest rates to curtail the panic from spreading in the Russian population and has also started selling foreign currency.

On Saturday, the United States and its European allies announced the expulsion of Russia from the international banking transaction system ‘SWIFT’. The United States and the United Kingdom indicated a ban on the Russian banks involved in fundraising transactions. Sanctions have already been imposed against many companies from the energy, technology and finance sectors. Repercussions of these successive sanctions are being felt in the Russian economy.

The Russian economy declined by a whopping 30% overnight, as the scope of sanctions started becoming apparent. It is claimed that the Russian economy has hit rock bottom following the decline. There was a record fall of the Russian currency Ruble against the USD. The Ruble slid by nearly 40% within 24 hours. Last week the exchange rate for USD to Ruble was 70 to 80 Rubles per USD. On Monday, this reached 117 Rubles to a USD.

Russian central bank has started drastic measures to curtail this decline. The interest rates have been increased directly to 20% from 9.5%. The central bank has begun selling the foreign currency held by it. At the same time, it has ordered the leading entrepreneurs to liquidate 80% of their USD holdings. On the other hand, Russian citizens are desperate to withdraw dollars and Rubles. Photographs of serpentine queues outside ATMs in many cities, including Moscow, have been published.

The western countries have indicated to impose harsher sanctions against Russia. But analysts pointed out that Russia has already made preparations to counter them. Economists have claimed that Russia will counter the western sanctions with Gold Reserves, increased use of currencies other than the USD, an independent Russian system for banking transactions and increasing cooperation with China and other countries.