The ruble is now worth less than one cent following Russia's invasion of Ukraine last week.
The value of Russia's currency dropped to a record low today, February 28, after the country was cut off from the global bank payments system.
It dropped nearly 26% to trade at 105.27 per dollar, down from about 84 per dollar late on Friday, in a shift that could cause inflation to surge and place strain on Russia's financial system.
President Vladimir Putin was set to hold crisis talks with his top advisers as a result of the crash, CNN reports, while the Russian central bank responded by more than doubling interest rates to 20%, and the Moscow stock exchange closed for the day.
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It comes after Western leaders imposed a range of sanctions against Russia in a bid to bring an end to the ongoing invasion launched by Putin on February 24, including restricting access for some Russian banks to the SWIFT global bank payments system.
European Commission President Ursula von der Leyen announced the EU would 'ban the transactions of Russia's central bank and freeze all its assets' when announcing sanctions last week, while the United States banned US dollar transactions with the Russian central bank.
A senior administration official cited by CNN explained, 'Our strategy, to put it simply, is to make sure that the Russian economy goes backward as long as President Putin decides to go forward with his invasion of Ukraine.'
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In the UK, the Chancellor of the Exchequer announced the UK Government’s intention to take further restrictive economic measures 'to demonstrate our steadfast resolve in imposing the highest costs on Russia and to cut her off from the international financial system so long as this conflict persists'.
Liam Peach, an emerging market economist at Capital Economics, has expressed belief that 'the ratcheting up of Western sanctions over the weekend has left Russian banks on the edge of crisis'.
Though Russia reportedly prepared for tough sanctions by building up a reserve of $630 billion in international reserves, the sanctions have restricted some access, with Peach estimating about 40% of Russia's reserves are now off limits to Moscow.
In a statement explaining the rising interest rates, the Russian central bank said 'external conditions for the Russian economy have drastically changed'.
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If you would like to donate to the Red Cross Emergency Appeal, which will help provide food, medicines and basic medical supplies, shelter and water to those in Ukraine, click here for more information
Emily Brown