In Russia, a bank run has begun as citizens rush to withdraw cash in the face of escalating sanctions. Meanwhile, the Russian ruble has plummeted by more than 30% to a new low. “About 70 people are in line.” According to eyewitnesses, the money in the ATM runs out in less than 40 minutes.”
Russians are rushing to withdraw cash as sanctions become more severe.
As offshore trading began in the morning during Asia hours, the Russian ruble plunged 30% to a record low against the US dollar, falling as low as 119.50 per dollar from Friday’s close. On Monday, Sberbank, Russia’s largest lender, and a London Stock Exchange-listed company, also fell 75%.
The drop came after the European Commission announced on Saturday that Western allies would impose restrictions on the Russian central bank’s $630 billion in international reserves. Ursula von der Leyen, President of the European Commission, stated:
The assets of Russia’s central bank will be frozen. Its transactions will be halted as a result of this. It will also make the liquidation of the central bank’s assets impossible.
The United States, its European allies, and Canada have agreed to cut key Russian banks off from SWIFT. This interbank messaging system connects over 11,000 banks and financial institutions in over 200 countries and territories.
“The military conflict will last longer than Putin anticipated, and the West’s and global community’s reactions may be more harmful than he anticipated,” Alexandre Moutin, head of investments at SMBC Private Wealth, was quoted by BBC News as saying. He continued, “
A bank run is already underway and is expected to worsen in the coming days.
After demand for cash reached its highest level since March 2020, Russia’s central bank, the Bank of Russia, had to increase the amount of money it supplies to ATMs on Friday.
Several people in Russia have shared photos and videos of long lines at ATMs. “A queue for a Tinkoff ATM in the Liga shopping center in Khimki,” one Twitter user said. He explained:
Around 70 people are waiting in line. According to eyewitnesses, the money in the ATM runs out in less than 40 minutes.
Russia’s central bank has urged citizens to relax, saying on Sunday that it has “the necessary resources and tools” to “maintain financial stability and ensure the financial sector’s operational continuity.”
People are still queuing to withdraw cash, however. “Everyone has been running from ATM to ATM to get cash since Thursday,” a St. Petersburg resident told Reuters. Some people are fortunate, while others are not.”
“I’ve stood in lines for an hour, but foreign currency is gone everywhere, only rubles,” another person waiting to withdraw cash at an ATM told Bloomberg.
Oanda’s senior market analyst in Asia, Jeffrey Halley, told Reuters:
Over the weekend, a bank run broke out in Russia… And as a result, inflation will skyrocket, putting the Russian banking system in jeopardy.
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