On Thursday, on the orders of Russian President Vladimir Putin, Russia launched a massive military attack on its southern neighbor Ukraine. After this, the Russian stock and money market came under a lot of pressure. The situation reached such a point that Russia's central bank had to come forward to stop the historic fall of the country's currency, the ruble.
A BBC correspondent in Moscow says people can't believe their country is attacking Ukraine. Long queues can be seen outside banks and ATMs in Moscow. People who are afraid of the consequences of the war are withdrawing their money from the banks.
This development has caused turmoil in the Russian financial market. Russia's currency ruble has fallen by ten percent against the US dollar and the euro. It is at its lowest level at the moment. Shares of some of the biggest Russian companies on the Moscow Exchange have fallen sharply with the opening of the market this morning.
At nine o'clock in the morning, the price of one euro had crossed a hundred rubles. The dollar also went above 90.
America has already said that in case of war it will stop the supply of dollars to Russian banks. This fear may have weakened the ruble further.
The stock market went down so fast that trading had to be stopped for two hours. But as soon as the market opened again, a thousand points rolled again.
Markets around the world are looking nervous due to the conflict between Russia and Ukraine. But the Russian Central Bank has also come forward to handle the falling ruble.
Central Bank came to save the ruble
"To stabilize the financial market, the Bank of Russia has decided to intervene in the foreign exchange market. Provision is being made for additional liquidity in the banking sector," the Russian Central Bank said in a statement.
The bank has also said in its statement that they are ready to face any situation because of the current political situation.
On the other hand, the Central Bank has banned short sales of brokers in the stock exchange and money market till further orders. The purpose of this moratorium is to prevent its decline while reducing betting pressure on the ruble.
The rest of the Russian banks have not yet indicated any problems. Sberbank has said that because of the current situation, it is ready to take every step to protect the money of its customers.
Sergei Romanchuk, head of foreign exchange at Metally Invest Bank, believes that the situation in Donbass is absolutely surprising for the financial market. No one had any idea about this.
He said, "Very few people believed that Russia would attack. Despite the claim of foreign intelligence agencies (which has now been proved right.) people here were not ready to believe it. This is a big event for the financial market. The potential of this market will no longer be the same. The people of Russia should be prepared that we will now look back at the financial market by many years."
Enough reserve but...
Sofia Donets, Chief Economist, Renaissance Capital, says, "I don't understand why the stock exchange opened today? Maybe it's because of the confidence to handle the situation. Or it could be a strategy. "
Analysts have different opinions about the increasing pressure on the ruble. Some believe that the ruble can be kept between 85-90 (per US dollar) due to sufficient foreign exchange reserves.
Donets says, "These reserves were kept for troubled days. And now these days have come. It would be strange if we do not use them at this time. Now the risk is too high. Russia's on Ukraine" The attack is more aggressive than expected."
The chaos in the Russian market started this morning. Putin addressed the country early in the morning, after which the Russian army launched a military operation in Ukraine.
As soon as this news came, there was an uproar in the Russian market. Oil boomed and it went above $100 per barrel. As soon as the stock exchange opened, the price of gas in Europe went above 1400 US dollars per thousand cubic meters.
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