MOSCOW (AP) — Ordinary Russians faced the prospect of higher prices and crimped foreign travel as Western sanctions over the invasion of
The Russian currency plunged about 30% against the
But the economic squeeze got tighter when the
“We are in uncharted territory of throwing all these nuclear options of sanctions at
Russians wary that sanctions would deal a crippling blow to the economy have been flocking to banks and ATMs for days, with reports on social media of long lines and machines running out. People in some central European countries also rushed to pull money from subsidiaries of Russia’s state-owned
Moscow's department of public transport warned city residents over the weekend that they might experience problems with using
Entrepreneur Vladimir Vyaselov found that flights were blocked for his overseas trip on a student visa. He was considering driving to another country and flying from there.
“I have been in disagreement with the decisions of all the authorities for a very long time and that is why I store all my money only in currencies, and I am skeptical towards
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, such as iPhones and PlayStations. Foreign travel would become more expensive as their rubles buy less currency abroad. And 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
Electronics will be a pain point, with computers and cellphones needing to be imported and the cost going up, said Kustra, who studies economic sanctions. Even foreign services like Netflix might cost more, though such a company could lower its prices.
The auto sector, a major employer, is “being hit very quickly with the ban on the import of microchips and other parts,” said
As long as even a few Russian banks were spared from the SWIFT cutoff, he said,
“So it really does critically depend on whether SWIFT remains open or whether that last channel is closed,” Weafer said.
After the West sanctioned
“So there's not need to fear any kind of immediate crisis or collapse” this year, he said. "It’s clearly only if these sanctions get tighter and extend over several years, the situation would clearly deteriorate over that period.”
The ruble slide conjured ugly memories of previous crises. The currency lost much of its value in the early 1990s after the end of the
On Monday, Russia’s central bank sharply raised its key interest rate to 20% from 9.5% in a desperate attempt to shore up the ruble and prevent a run on banks. It also said the
European officials said at least half of Russia’s estimated
Kremlin spokesman
The steps taken to support the ruble are themselves painful because raising interest rates can hold back growth by making it more expensive for companies to get credit. Russians who have borrowed money, such as homeowners with mortgages or business owners who have taken out loans, also could get hit by doubled interest rates, experts said.
The ruble sank about 30% against the
McHugh contributed from
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