Ruble to rubble: Russia faces worst financial crisis since the fall of the Soviet Union after Ukraine invasion

Ruble to rubble: Russia faces worst financial crisis since the fall of the Soviet Union after Ukraine invasion
Western sanctions are devastating the Russian economy following Moscow's invasion of Ukraine.
2 min read
02 March, 2022
Russians have rushed to ATMs to attempt to withdraw their savings [Getty]

The Russian economy is teetering on the edge of collapse as Western nations continue to impose sanctions in response to Moscow's brutal invasion of Ukraine.

The sanctions target several sectors of the Russian economy, including the oligarchs who are widely viewed as helping prop up the Putin regime.

The banking sector, in particular, has been badly hit, as major commercial banks are removed from the international system of global money transfer (SWIFT) which prevents them from participating in the global economy.

Some analysts say this could be the beginning of the worst financial crisis to hit Moscow since the fall of the Soviet Union.

The Russian ruble is now worth less than 1 US cent after its value dropped by nearly 30 percent, according to The Financial Times

The Russian central bank is also in crisis as 40 percent of its assets have been frozen by Western powers, estimated to be $630 billion. Moscow's biggest lender Sberbank has been forced to pull out of nearly all European markets blaming threats to its staff and the harsh sanctions that have been imposed following Russia's unprovoked invasion of Ukraine.

On Monday, JP Morgan predicted that Russia’s economy could contract by 20 percent in the second quarter of 2022, and by around 3.5 percent for the entire year following the intense sanctions.

The Kyiv Independent reported that some Russian lawmakers fear the invasion of Ukraine could lead to the "degradation and impoverishment" of the country. 

Ordinary Russians are likely to be the worst affected by these sanctions while will likely cripple their livelihood and obliterate savings.

This has caused a rush to cashpoints over the weekend to withdraw dollars from ATMs.  Many Russian jobs are now at risk as companies cut costs in an attempt to stay afloat. The Kremlin claims it has the resources to weather this financial storm but analysts are not so sure.