Finally, cracking in the face of economic sanctions, Russia has prohibited its citizens from purchasing the US dollar. The country once aspired to join a club of global financial powers is now plummeting to its iron curtain days.
Putin’s original plan was to make the rouble a viable alternative to the world’s top currencies. That would include the euro, the US dollar, the British pound, and other leaders in the foreign exchange market. That would also imply that Russia would position itself as one of the top five economic powers globally. However, a series of aggressive geopolitical moves on Putin’s end has put a definitive halt to the plan.
The first incident came in 2008 when Russia assaulted Georgia. Then the annexation of Crimea happened in 2014, and finally, the current attack on Ukraine. Each time Russia has faced sanctions in hopes of preventing its strongarming tactics, and each time the rouble has crashed. However, none of the previous incidents have had an impact as staggering as the current one.
In 2008 one dollar was worth 25 roubles. After a record depression for the latter, one dollar could purchase 117 roubles via the local Moscow exchange before the ban. And in exchanges outside of Russia, the rouble is doing significantly worse.
The rouble isn’t faring well against other global currencies either. EUR/RUB is at 128.47 at the time of writing and is on a downward slope indicating further depreciation. Furthermore, Russia announced a cap on purchasing international currencies, lowering its buying power even more. Russians with foreign currency accounts can withdraw only up to $10,000 in the following six months.
While one of Russia’s primary efforts was to become sanction-proof, it’s apparent that it was fruitless. Hopefully, the threat of financial collapse will halt the aggression sooner rather than later.
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