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The West is still paying Russia more than $1billion-a-day for oil and gas that Putin can use to subsidise his $15billion-a-day invasion of Ukraine as his troops remain bogged down after hitting fierce resistance from Volodymyr Zelensky’s heroes.
The Russian economy remains in total meltdown today as Western countries stepped up sanctions and the rouble crashed to an all-time low.
But Putin’s grip on the world’s oil and gas taps means that Europe and the US are still buying almost $1billion-a-day from Russia. The UK also imports smaller amounts from Russia.
However, despite the huge daily cash injection from the West, the Kremlin is facing unprecedented liquidity problems. Its central bank, which raised interest rates to 20% yesterday, is expected to turn to its ally China to try to sell off Chinese assets worth up to $77billion back to Beijing. Britain, the EU and the US will be watching to see just how far President Xi is willing to support Putin and his war.
In a sign the Russian people are paying the price for Vladimir Putin’s invasion of Ukraine, the country’s currency dropped 30 per cent against the US dollar. It has stabilised this morning after hitting rock bottom yesterday.
And after days of turmoil on financial markets, regulators in Russia refused to open the Moscow stock exchange, while long queues formed outside banks as panicked families tried to withdraw cash.
A Moscovite called Anton said: ‘There are no dollars, no roubles – nothing. Well, there are roubles but I am not interested in them. I don’t know what to do next. I am afraid we are turning into North Korea or Iran right now’.
One designer called Andrey told the BBC that rising interests rates mean he can’t pay his mortgage. He said: ‘If I could leave Russia right now, I would. But I can’t quit my job’.
‘I am planning to find new customers abroad asap and move out of Russia with the money I was saving for the first instalment. I am scared here – people have been arrested for speaking against ‘the party line’. I feel ashamed and I didn’t even vote for those in power.’
Russia’s central bank raised interest rates from 9.5 per cent to 20 per cent to counter the violent slump in the rouble and soaring inflation. It also ordered companies to sell 80 per cent of their foreign currency.
Despite the devastating financial damage in just 24 hours, a smirking Vladimir Putin yesterday ranted about the West’s ’empire of lies’ and banned Russians from sending their money abroad from midnight as worldwide sanctions caused the rouble to tumble and sparked a nationwide rush to withdraw cash.
Vladimir Putin smirked when he spoke on Russian TV and wrote off the sanctions being imposed by the West, who are still buying huge amounts of oil and gas
A Russian walks in front of a digital board showing Russian rouble exchange rates against the euro and the US dollar outside a currency exchange office in Moscow, as the price slides
The rouble and major Russian companies, owned by Putin’s oligarchs, have seen unprecedented falls in value after the Ukrainian invasion and sanctions from the West
Russia has a tight grip on Europe’s gas market, with major nations including Germany buying up to 30% of their supply from Putin
The currency sank 30 per cent in early trading before easing back to stand 20 per cent down. Its collapsing value risks wiping out the savings of ordinary Russians, who have been seen flocking to ATMs all over the country to empty their accounts, including in Putin’s home city of St Petersburg.
But as the Russian economy tanked, the Russian President took another swipe at Western sanctions yesterday during an emergency meeting with economic officials at the Kremlin.
‘I’ve invited you here to talk about issues to do with the economy,’ he told officials with a smirk, adding: ‘I mean of course the sanctions which the so-called Western community – the empire of lies – is trying to implement against our country.’
Yesterday afternoon Putin announced a diktat to ban the depositing of cash in any foreign accounts from tomorrow, to stop cash, especially held by rich Russians, moving out of the country and further destablising the economy.
A fresh barrage of sanctions saw the US cut off the Russian central bank, effectively preventing Americans from doing business with it and severely limiting Russia’s ability to defend its currency.
The US also imposed sanctions on the state investment fund, with an official saying Joe Biden intended to ensure the Russian economy ‘goes backward as long as Putin goes forward with his invasion of Ukraine’.
British Foreign Secretary Liz Truss said all Russian banks would be hit with a full asset freeze within days as she announced new powers to limit them from clearing payments in sterling, which will initially target the nation’s largest bank, Sberbank. Transport Secretary Grant Shapps wrote to British ports telling them to turn away any Russian ships.
Even famously neutral Switzerland announced it was copying the EU’s sanctions regime and banning five oligarchs from the country.
Russia’s central bank has now more than doubled interest rates from 9.5 per cent to 20 per cent and refused to open the Moscow stock exchange in a desperate attempt to protect its currency and economy.
Despite the measure, vast queues were seen outside cash machines in Russia at all hours.
Pictures showed people in Saint Petersburg queuing around the corner to use nearby ATMs. It comes as fears rise of an economic collapse in Russia due to biting Western sanctions imposed following president Vladimir Putin’s now floundering invasion of Ukraine.
Its board of directors blamed a ‘drastic change’ on the ‘external conditions for the economy’ behind the massive interest rate hike.
Top economists and the finance ministry also ordered exporting companies to sell 80 per cent of their foreign currency revenues on the market to try to support the rouble – the value of which continued to collapse against the dollar and the euro on the Moscow Stock Exchange on Monday.
Despite banking chiefs attempting to steady the ship, the Russian rouble plummeted to an all-time low as the West’s sanctions over the Ukraine war start to squeeze the economy.
The European Central Bank also warned on Monday that the European subsidiary of the Russian state-owned Sberbank – one of the Russian banks under UK sanctions – was facing bankruptcy.
Vladimir Putin held a meeting with senior economic officers yesterday, at one end of his 10-metre long table, where he referred to the West as an ’empire of lies’
Vast queues have been seen outside Russian ATMs despite the country’s central bank hiking interest rates in a bid to stop a run on the rouble
Western nations imposed sanctions on Vladimir Putin’s country after he launched a brutal war on neighbouring Ukraine last week, with the UK, US and EU cranking up restrictions in recent days.
Now Putin resorts to banned CLUSTER BOMBS as dozens are killed
By Chris Pleasance in London and Nick Craven in Lviv for MailOnline
Russia appears to have used banned cluster munitions to indiscriminately shell civilian areas in Ukraine’s east that had stood up to Vladimir Putin’s invasion in what would constitute a war crime.
Kharkiv, which has witnessed some of the heaviest fighting of the war so far, was hit by rockets fired from Russian positions on Monday – with video showing a shopping centre in the Serpnia area blanketed by explosions. A military source told MailOnline that the videos showed ‘cluster’ munitions had been used.
Kharkiv, Ukraine’s second city may have been hit by so-called ‘cluster’ munitions, causing ‘dozens’ of casualties
‘The BM-21 Grad is a multiple launch rocket system used for ‘area denial’, dropping cluster bombs on a concentrated area,’ the expert said. ‘It’s mainly used on enemy troops before an offensive. Used against civilians, it’s not only a war crime, but has only one purpose – to spread terror and alarm among the civilian population.’
Graphic images and video revealed streets littered with the bodies of dead and badly wounded civilians, with other images showing showing spent BM-21 Grad rocket cartridges laying in the streets and having fallen through apartment roofs.
New legislation introduced in the UK parliament this week will force foreign owners to reveal the true ownership of their properties. It will also make it easier for officials to use unexplained wealth orders (UWOs) to seize criminal assets – such as homes, yachts or jets – without having to prove to a criminal law standard that the property was obtained as a result of a crime being committed.
Foreign Secretary Liz Truss said: ‘We will be targeting oligarchs’ private jets, we will be targeting their properties, we will be targeting other possessions that they have and there will be nowhere to hide.’
Meanwhile Putin’s forces have so far failed to swiftly take over the country after a ferocious fightback from President Volodymyr Zelensky’s troops.
This is causing further economic impact, with experts estimating the war is costing Russia as much as £15billion each day.
Dozens of civilians have been killed and hundreds wounded after Russian rocket artillery fired in Ukraine’s second-largest city of Kharkiv.
And fresh measures to help Ukrainian refugees fleeing the Russian invasion are likely to be introduced as the UK Government came under pressure to act.
Meanwhile Defence Secretary Ben Wallace dismissed Vladimir Putin putting his nuclear forces on high alert as being a part of the Kremlin’s ‘battle of rhetoric’.
Ahead of an emergency United Nations General Assembly meeting, Ukrainian President Volodymyr Zelensky said the next 24 hours would be a ‘crucial period’ after Kyiv and other cities survived another 24 hours of bombardment.
Russian and Ukrainian forces have again been engaged in heavy fighting ahead of the widely expected assault on the capital.
Ukrainian defenders have put up stiff resistance, but a US official cautioned that far stronger Russian forces inevitably will learn and adapt their tactics.
It was claimed Chelsea owner Roman Abramovich is trying to broker a deal to end to the war in Ukraine and had already arrived in Belarus to assist in peace talks.
Meanwhile, the Anonymous group has targeted three Russian state news agencies and taken down the Kremlin website after Russia painted Ukrainian troops as ‘Nazis’.
Yesterday, the Bank of Russia hiked the key rate from 9.5 per cent to counter risks of rouble depreciation and higher inflation and also ordered companies to sell 80 per cent of their foreign currency revenues.
It said: ‘External conditions for the Russian economy have drastically changed.’ It added the hike ‘will ensure a rise in deposit rates to levels needed to compensate for the increased depreciation and inflation risk.’
Pictures show people in Saint Petersburg queuing around the corner to use nearby cash machines, as fears rise of an economic collapse due to biting Western sanctions imposed following Russia’s floundering invasion of Ukraine
In a bid to stop a run on the rouble, Russia’s central bank, The Bank of Russia, is hiking interest rates from 9.5 per cent to 20 per cent this morning. Pictured: Residents queue to withdraw cash in Saint Petersburg
The Russian rouble has plummeted to an all-time low as the West’s hefty sanctions over the Ukraine invasion start to squeeze the economy
The currency dropped to as low as 119 per dollar (pictured over the last day) in early trading, tumbling beyond its previous low of 90 roubles per dollar. It was last at 109
The changes came despite Russia’s central bank announcing a slew of steps yesterday to support domestic markets. Pictured: The rouble against pound sterling over the last day
Monday’s steps bolster other measures announced on Sunday, which include the central bank’s assurance it would resume buying gold on the domestic market.
It also said it would launch a repurchase auction with no limits and ease restrictions on banks’ open foreign currency positions.
And it increased the range of securities that can be used as collateral to get loans and ordered market players to reject foreign clients’ bids to sell Russian securities.
Central Bank Governor Elvira Nabiullina is set to hold a briefing at 1pm GMT, the bank said in its statement on Monday.
It comes after the rouble dropped to as low as 119 per dollar in early trading, tumbling beyond its previous low of 90 roubles per dollar, having last been at 109, while the dollar soared.
Western allies have ratcheted up sanctions on the country, including blocking certain banks from the SWIFT international payments system.
Restrictive measures on the Bank of Russia were also imposed to prevent it from deploying its international reserves to undermine sanctions.
Adding to nerves, Vladimir Putin put Russia’s ‘deterrence forces’ – which wield nuclear weapons – on high alert.
People on the ground in Russia were already feeling the squeeze as Russians yesterday started racing to cashpoints as ‘panic started’.
Russian economist Vladislav Zhukovskiy told the Telegraph: All over the country there are queues at ATMs to withdraw money.
‘Banks are selling the dollar at 100 to 120 roubles. Where are [central bank chief] Elvira Nabiullina and [prime minister] Mikhail Mishustin?’
Sberbank sent out alerts to customers early yesterday telling them the bank was ‘operating normally’.
In Khimki, near Moscow, a shopping mall had a huge queue running through it as rucks of people waited for an ATM.
Visitors to the capital were asked if they would pay their hotel bills before leaving in case their cards will not work next week.
Adding to nerves, Vladimir Putin put Russia’s ‘deterrence forces’ – which wield nuclear weapons – on high alert. People on the ground in Russia were already feeling the squeeze as Russians yesterday started racing to cashpoints as ‘panic started’. Pictured: People stand in line to withdraw money from an ATM in Sberbank in St. Petersburg, Russia, on Friday
Central Bank Governor Elvira Nabiullina is set to hold a briefing at 1pm GMT, the bank said in its statement on Monday. It comes after the rouble dropped to as low as 119 per dollar in early trading, tumbling beyond its previous low of 90 roubles per dollar, having last been at 109, while the dollar soared. Pictured: People stand in line to withdraw money from an ATM of Alfa Bank in Moscow, Russia, on Sunday
Western allies have ratcheted up sanctions on the country, including blocking certain banks from the SWIFT international payments system. Pictured: A man walks past a board showing currency exchange rates of the euro against the Russian rouble in a street in Saint Petersburg, Russia February 25
Deputy Chief Economist at the Institute of International Finance Elina Ribakova said: ‘Bank runs have started from the very first day of sanctions and have accelerated over the weekend.’
Elsewhere, the euro tumbled 1.1 per cent to $1.1148. It was also down 1 per cent on both the yen and the Swiss franc.
But the dollar was the main winner of the tension around Ukraine. The dollar index, which measures the currency against six peers, was up 0.83 per cent at 97.368.
The greenback even gained a fraction on the yen, which was at 115.53 per dollar.
Carol Kong, an FX strategist at Commonwealth Bank of Australia, said: ‘In the near term we think the dollar faces a risk of pushing above the 97.47 resistance level.’
She said the extent of the dollar’s gains would depend on any further leap in volatility, the size of the sell-off in global equities, and assessments of central banks’ tightening programmes.
She noted high energy prices were capping the yen, given Japan imports the bulk of its energy requirements.
Markets are now pricing in a 95 per cent chance the US Federal Reserve will hike rates by 25 basis points at its March meeting, according to CME’s Fedwatch tool, with the invasion having put an end to speculation that the Fed will jump in with a 50 basis point hike.
Investors also believe the war will deter the European Central Bank from any strong tightening moves in the near term.
The Australian dollar slid 0.72 per cent to $0.7180, the New Zealand dollar sank 0.76 per cent to $0.6685, and sterling was slightly weaker at $1.335.
A top official at the Reserve Bank of New Zealand told Reuters in an interview it is too early to assess what impact, if any, the Russian invasion of Ukraine might have on policy, and that it has more work to do on interest rates to control inflation.
In cryptocurrency markets, bitcoin was in the middle of its recent range, trading just below $38,000.
It comes as the UK Government said it was fast-tracking legislation to target money-laundering by foreign oligarchs.
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