Russians line up at ATMs as sanctions bite

Moscow, February 28

Ordinary Russians faced the prospect of higher prices and crimped foreign travel as Western sanctions over the invasion of Ukraine sent the ruble plummeting, leading uneasy people to line up at banks and ATMs on Monday in a country that has seen more than one currency disaster in the post-Soviet era.

The Russian currency plunged about 30 per cent against the US dollar on Monday after Western nations announced moves to block some Russian banks from the SWIFT international payment system and to restrict Russia’s use of its massive foreign currency reserves. The exchange rate later recovered ground after swift action by Russia’s central bank.

People wary that sanctions will deal a crippling blow to the economy have been flocking to banks and ATMs, with reports of long lines and machines running out.

Moscow’s department of public transport warned city residents over the weekend that they might experience problems with using Apple Pay, Google Pay and Samsung Pay to pay fares because VTB, one of the Russian banks facing sanctions, handles card payments in Moscow’s metro, buses and trams.

A sharp devaluation of the ruble would mean a drop in the standard of living for the average Russian, economists and analysts said. Russians are still reliant on a multitude of imported goods and the prices for those items are likely to skyrocket.

Foreign travel would become more expensive as their rubles buy less currency abroad. And the deeper economic turmoil will come in the coming weeks if price shocks and supply-chain issues cause Russian factories to shut down due to lower demand.

“It’s going to ripple through their economy really fast,” said David Feldman, a professor of economics at William amp; Mary in Virginia.

“Anything that is imported is going to see the local cost in currency surge. The only way to stop it will be heavy subsidisation.” The Russian government will have to step in to support declining industries, banks and economic sectors, but without access to hard currencies like the US dollar and euro, they may have to result to printing more rubles. It’s a move that could quickly spiral into hyperinflation.

The rouble slide recalled previous crises. The currency lost much of its value in the early 1990s after the end of the Soviet Union, with inflation and loss of value leading the government to lop three zeros off ruble notes in 1997. Then came a further drop after a 1998 financial crisis in which many depositors lost savings and yet another plunge in 2014 due to falling oil prices and sanctions imposed after Russia seized Ukraine’s Crimea peninsula. — AP

UK announces fresh sanctions

London: Britain will lock Russia’s Sberbank out of sterling clearing and slap sanctions on three other banks, Foreign Secretary Liz Truss said on Monday, adding there would be a full asset freeze on Russian lenders within days. The government also advised citizens against all travel to Russia. Reuters

Sberbank faces ‘failure’ in Europe

Belgrade: Faced with a rush of people withdrawing money, Sberbank and the Russian bank’s subsidiaries in southeastern and central Europe are facing closures or takeovers following international sanctions imposed on Moscow. AP

West an ‘Empire of Lies’, says Putin

Moscow: Russian President Vladimir Putin called the West an “Empire of Lies” as he discussed the economy with top officials on Monday following the imposition of sweeping sanctions against Moscow, the Kremlin said. “PM and I discussed this topic, bearing in mind the sanctions that the Western community is now trying to implement,” a transcript of the meeting quoted Putin as saying. Reuters