On Monday, as Western sanctions took effect and Russia awakened to uncertainty and panic about the swiftly expanding implications of President Vladimir V. Putin’s invasion of Ukraine, the ruble plummeted, the stock market froze, and the populace hurried to withdraw cash.
Within hours of the day beginning, Russia’s currency had lost up to a quarter of its value. To combat the slide, the Russian Central Bank more than quadrupled its main interest rate, prohibited foreigners from selling Russian securities, and required exporters to change the majority of their foreign-currency income into rubles. Because of the incident, the Moscow stock market was closed for the day “developing situation.”
“The economic reality has, of course, changed,” Dmitri S. Peskov, the Kremlin’s spokesperson, told reporters that Mr. Putin had convened an emergency meeting with his top financial officials.
Even as Russian and Ukrainian delegates gathered for negotiations near the Belarus border, Moscow’s military onslaught continued unabated, and the frantic movements provided the first evidence that the West’s sanctions against Russia were upsetting the country’s economy. The United States, the United Kingdom, and the European Union’s actions to deny the Russian Central Bank access to a large portion of its $643 billion in foreign currency reserves have undone much of the Kremlin’s meticulous attempts to mitigate the impact of possible sanctions.
And it was becoming clear that Mr. Putin’s invasion of Ukraine was ushering in a period of international isolation for Russia unprecedented since the Cold War, with dozens of countries closing their airspace to Russian planes, major foreign investors pulling out, and the West imposing crippling restrictions on Russia’s biggest banks.
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“So, has Russia become Venezuela, or is it still Iran?”On Monday, the host of the liberal-leaning Echo of Moscow radio program posed a question to an economist.
“We’ll go through the Iran phase,” Yevgeny S. Gontmakher of Moscow’s Higher School of Economics responded, referring to sanctions placed on Iran because of its plans for uranium enrichment, “but what happens after that is hard to say.”
At 4 p.m. Moscow time, Elvira Nabiullina, the well-acclaimed governor of the Russian Central Bank, was scheduled to talk to the public.
In a televised meeting with his defense minister and senior military commander on Sunday, Mr. Putin termed the West’s sanctions “illegitimate.” Mr. Putin subsequently directed them to put Russia’s nuclear weapons on high alert; other observers believe that Russia’s economic difficulties may prompt Mr. Putin to intensify his fight with the West by threatening fresh military threats or using other tactics, such as hacking.
However, there was a great deal of uncertainty inside Russia as the value of people’s money plummeted and the linkages with the Western world that Russians had become accustomed to over the previous three decades swiftly disintegrated. It was unclear if the majority of Russians would blame Mr. Putin for the crisis, or if they would follow Kremlin propaganda and blame the West.
“Times change, much has happened, but one thing has not changed,” a reporter on the state-run news channel Rossiya 24 said on Sunday. “When a united Europe tried to destroy Russia, this always ended up bringing about the opposite result.”