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The Russian central bank takes steps to stabilize the ruble as it plummets in value

Andrey Rudakov/Bloomberg via Getty Images

The Bank of Russia is proceeding with emergency measures to stabilize its economy and to prevent the Russian ruble from losing further value.

For the first time, the Russian central bank said that it will intervene in the foreign exchange market and expand its Lombard list of securities that it will accept as collateral, Bloomberg reported.

The central bank did not mention whether or not it would raise interest rates but it did proceed with agreeing to provide Russian banks with additional liquidity. It is preparing to offer banks 1 trillion rubles — roughly $11.5 billion —in an overnight repo auction.

On Thursday, Russian President Vladimir Putin, ordered Russian forces to launch their invasion of Ukraine and strike strategic targets to demilitarize the country. Upon doing so, the ruble fell to a record low in value.

In response to Russia’s invasion of Ukraine, leaders of Western nations are implementing a wide array of sanctions to weaken the Russian economy.

Less than a day after the Russian invasion of Ukraine began, President Joe Biden announced that the United States would target Russia’s largest financial institutions, Sherbank and VTB, to prevent them from using the American financial system to conduct transactions. These sanctions are fairly comprehensive and will restrict nearly 80% of Russian banking assets.

Previously, Biden stopped short of calling for Russia’s removal from the Society of Worldwide Interbank Financial Telecommunication (SWIFT).

Biden said, “It is always an option, but right now it’s not the position the rest of Europe wishes to take.”

Kicking Russia out of SWIFT would greatly damage the Russian economy in the short term and make recovery incredibly difficult in the long term. It could prevent Russia from engaging in international transactions and would cripple their ability to export oil and gas.

On Saturday, the allied leaders of several Western countries — including the Untied States — expressed their support for preventing Russia from being able to access and utilize the SWIFT network.

The Western leaders agreed to target specific Russian banks for removal from the SWIFT system, to prevent the Russian central bank from manipulating its monetary policy, and to take aggressive steps to sanction and financially punish Russian individuals involved in the invasion of Ukraine.

By preventing Russia from using the SWIFT network, the West will effectively isolate them and inhibit them from conducting trade with some of its largest trade partners.

At the time of writing, a Russian ruble is worth about 0.012 U.S. dollars. The in-game currency for the popular children’s videogame “Roblox” – aptly named Robux – is worth about 0.0125 U.S. dollars per unit.

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