The ruble is in dire trouble as sanctions hit Russia hard, causing a run on the banks as Western sanctions threaten the international assets of all Russian citizens.

Last Tuesday, February 22, the Russian ruble was worth just under 0.013USD, or 1.3 cents, about where it’s been since the invasion of the Crimean Peninsula several years ago. The same day, Putin’s shift to a more threatening posture regarding Ukraine started the currency in its decline, but it wasn’t until Thursday, when the Russians began shelling Ukrainian cities, that it went into sharp decline. Today, the conversion rate is one ruble to less than a cent, 105 rubles to a dollar. A five-day decline of over 26% in spending power.

The big knife in the currency’s back is the international decision to block major Russian banks from the SWIFT international payment system, the messaging system through which most worldwide financial institutions move money around. This cuts off many Russians from the contents of their bank accounts and the Russian government itself from their international currency reserves.

Following that, the United States froze all assets in the Russian central bank held in the United States or by U.S. citizens. According to the Biden administration, that move alone could impact “hundreds of billions of dollars” of funding available to Russia. The EU and many other countries have announced plans to follow suit.

With Russian President Vladimir Putin obliquely and not-so-obliquely threatening nuclear retaliation over international interference in the claim he believes Russia holds over Ukraine (and likely Poland and Hungary next), these banking sanctions are hitting him where it hurts – in the wallets of the other Russian oligarchs who have propped him up for so long. The Russian citizenry, who have had little say in who their leaders are or what actions they take for generations, are going to be economic casualties of this conflict until the ruble can stabilize, and likely even then.

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