Russians feel start of sanctions squeeze as ruble plummets

Some early signs are emerging of significant economic consequences to Russia following its invasion of Ukraine three days ago. While official quotes for the Russian ruble were unchanged at roughly 84 rubles to the dollar, one online Russian bank, Tinkoff, was giving an unofficial exchange rate of 152 rubles over the weekend.

Videos from Russia showed long lines of Russians trying to withdraw cash from ATMs, while the Russian Central Bank issued a statement calling for calm, in an effort to avoid bank runs. Reports also showed that Visa and Mastercard were no longer being accepted for those with international bank accounts.

“Banks and credit card companies dealing with Russia are going into lockdown mode given the fast pace and increasing bite of the sanctions,” said Amanda DeBusk, a partner with Dechert LLP.

Russia may have to temporarily close bank branches or declare a national bank holiday to protect its financial system, analysts said.

“If there’s a full-scale banking panic, that’s a driver of crisis in its own right,” said Adam Tooze, a professor of history at Columbia University and Director of the European Institute.

“A rush into dollars by the Russian general population moves things into an entirely new domain of financial warfare.”