People stand in line to withdraw money from an ATM of VTB Bank in downtown Moscow, Russia, Monday, Feb. 28, 2022. AP
This attempt came as a response to the sanctions implemented, as western nations moved to block Russian banks from the SWIFT global payment system.
The Russian Central Bank’s action follows the Western decision Sunday to freeze its hard currency reserves in an unprecedented move that could have devastating consequences for the country's financial stability.
It was unclear exactly what share of Russia's estimated $640 billion hard currency coffers will be paralyzed by the move, but European officials said that at least half of it will be affected.
The ruble was trading at a record low of 105.27 per dollar early Monday, down from about 84 per dollar late Friday.
The Central Bank’s move will dramatically raise pressure on the ruble by undermining the financial authorities' ability to conduct hard currency interventions to prevent the ruble from sinking further and triggering high inflation. The ruble has sharply dived in early Monday trading.
It has also ordered a slew of measures to help the banks cope with the crisis by infusing more cash into the system and easing restrictions for banking operations. At the same time, it temporarily barred non-residents from selling the government obligations to help ease the pressure on ruble from panicky foreign investors eager to cash out.
Over the weekend, Japan joined the moves by the U.S. and other Western nations to impose more sanctions against Russia.
Restrictions on the Russian central bank targets its access to more than $600 billion in reserves the Kremlin has at its disposal. They hinder Russia's ability to support the ruble as it plunges in value.
Sanctions announced earlier had taken the Russian currency to its lowest level against the dollar in history.
Short link: