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As the war between Russia and Ukraine hit and sanctions imposed by the West, the inflation got higher, and so did the interest rate to counter
Four days ago, Russia launched a large-scale military invasion on its southwest neighbor Ukraine. The situation was already weak due to the post-Covid-19 pandemic, and the economy was reviving slowly. War itself is not suitable for the economy’s health. On top of that, sanctions made the situation worse.
Effects were visible with the beginning of the war on 24 Feb, where the share market across the globe was experiencing a downtrend, and the Russian market was at its worst. Crypto market trading inside the country is also affected as the native currency, Ruble, loses its value due to inflation.
Stablecoin backed by the US dollar, Tether (USDT), has seen a growth of 30% against the Russian Ruble in the last five days. Breaking all the previous records, the trading volume of USDT-RUB crossed 105 RUB, which is an all-time high for the trading pair. Not only this, but the BTC-RUB trading pair is also trading at its nine month high. These are enough to highlight the negative impact of war on the economy and financial system.
Before the current all-time high trading volume, the pair had not crossed the mark of even 80 RUB. But with the commencement of the war, the result started reflecting on the crypto market, and on itself, it has reached 90 rubles.
Bloomberg reported the value of Russian rubles had escalated against US dollars which were at 90 rubles till last week but has seen a surge of 28% and reached 118 rubles. Currently, it’s at 102 rubles.
Still, it seems like neither the intensity of war is getting low nor the sanctions and economic actions against Russia. On 27 Feb, European Nations announced their plans to remove Russian banks from the SWIFT messaging system.
SWIFT is the Society for Worldwide Interbank Financial Telecommunication; it’s a secure global messaging network used by banks of various countries to make cross-border payments rapidly with ease.
Getting removed from the system will badly affect Russian banking systems. Inflation rates are already high, up to 30%. To counter it, the Russian Central Bank has doubled the interest rates from 9.5% to 20%.
These are some of the worst scenarios where the Russian government and Central Bank need to act as soon as possible. Doubling interest rates, stopping non-residents from selling their assets, and telling Russian companies to sell their foreign currency revenues up to 80% may not have long term effects and end up affecting its citizens.
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Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
