Currency crashes as US bans imports of Russian energy products
The ruble continued its decline on Wednesday, hitting record lows against major currencies yet again, after US President Joe Biden announced a ban on all imports of Russian energy products, such as oil and gas.
The Russian currency was down roughly 15% against the greenback, trading at 120 rubles per US dollar and was down 10% to 131 against the euro on the Moscow Exchange at 08:47 GMT.
Russia’s financial markets have been hit hard by sanctions imposed over its war with Ukraine. Since Russian troops entered the neighboring state two weeks ago, the ruble is down close to 50% against the dollar.
The Russian central bank gave up its attempts to support the currency because over half the country’s reserves have been frozen abroad and the EU banned the import of euro-denominated currency into the country, among other measures. Instead, the regulator introduced restrictions on currency exchange within Russia, and reduced the amount of foreign currency that individuals can take abroad in an effort to curb demand for dollars and euros.
Additionally, on Wednesday the Russian government eliminated value added tax (VAT) on the purchase of gold by individuals. The measure is meant to give Russian citizens the opportunity to invest in gold instead of purchasing foreign currency, something many did in the past to protect their savings.
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