Washington/Moscow: The rouble plunged nearly 30% to an all-time low versus the US dollar on Monday as markets opened for trading on the first day after western nations announced punishing economic sanctions on Russia for its invasion of Ukraine.
The rouble dropped to as low as 119 per dollar and was last down 28.77% at 118 from its closing price of 83.64 on Friday.
The sanctions include blocking some Russian banks from the Swift international payments system, leading investors to anticipate a run on the Russian currency as people try to change their money for dollars and other denominations.
“The escalating crisis in Ukraine will force markets to price in a substantially higher geopolitical risk premium,” strategists at the Australian bank Westpac said on Monday. “The Ukrainian situation is volatile.”
Japanese chief cabinet secretary Hirokazu Matsuno said on Monday that Japan was asked to join in measures blocking Russia from Swift by western nations and was working with them to make the measures effective.
The governors of a handful of US states have ordered government-run liquor stores to stop selling Russian-made vodka and distilled spirits in solidarity with the Ukrainian people after Russia’s invasion.
Vladimir Putin has ordered his military to put Russia’s nuclear deterrence forces on high alert, in the latest signal from the Russian leader that he is prepared to resort to the most extreme level of brinkmanship is his effort to achieve victory in Ukraine.
The US accused Putin of “totally unacceptable” escalation and made clear that it would keep up its support of Ukraine and punitive measures on Russia. With the EU also announcing unprecedented new measures against Moscow, it was clear that Putin’s assault on Ukraine had failed to yield the quick victories he had anticipated but had instead rallied a concerted western response that was potentially devastating for Russia’s economy.
The Ukrainian president, Volodymyr Zelenskiy, announced that a delegation from Kyiv would meet Russian officials without preconditions on his country’s border with Belarus, but it was far from clear Putin was ready to entertain talks that did not involve compliance with his demands that Ukraine accepts partition and disarm.
“I do not really believe in the outcome of this meeting, but let them try, so that later not a single citizen of Ukraine has any doubt that I, as president, tried to stop the war,” Zelenskiy said.
In the absence of a quick military breakthrough, Putin signalled he was prepared to escalate his onslaught on Ukraine while taking the unprecedented step of explicitly brandishing Russia’s nuclear arsenal in an effort to deter western support for Ukraine. On Sunday, however, that support continued to grow.
The EU announced it would fund weapons supplies to the Ukrainian armed forces, including fighter jets, block European airspace to all Russian aircraft including the private jets of oligarchs, and banned the Kremlin’s propaganda channel RT, and its news agency, Sputnik.
BP announced it would divest its nearly 20% stake in the Russian oil corporation Rosneft.
Turkey declared that it would close the Bosphorus and Dardanelles straits to the Russian navy, stopping its vessels from moving between the Mediterranean and the Black Sea.
Sweden will send military aid to Ukraine, including anti-tank weapons, helmets and body armour, its prime minister, Magdalena Andersson, said on Sunday.
Putin’s nuclear order came at a meeting between the president, the defence minister, Sergei Shoigu, and the chief of the general staff of the armed forces of Russia, Valery Gerasimov.
“Senior officials of the leading Nato countries also allow aggressive statements against our country, therefore I order the minister of defence and the chief of the general staff [of the Russian armed forces] to transfer the deterrence forces of the Russian army to a special mode of combat duty,” Putin said in televised comments.
“Western countries aren’t only taking unfriendly actions against our country in the economic sphere, but top officials from leading Nato members made aggressive statements regarding our country.”
The Nato secretary-general, Jens Stoltenberg, told CNN, in reaction to Putin’s decision to put Russia’s nuclear forces on high alert: “This is dangerous rhetoric. This is a behaviour which is irresponsible.”
Putin has told foreign countries not to interfere in his invasion of Ukraine, saying it could lead to “consequences they have never seen”. He has positioned anti-air missiles and other advanced missile systems in Belarus and deployed his fleet to the Black Sea in an effort to prevent a western intervention in Ukraine.
As Russia’s international isolation deepened, there were growing signs of disquiet from Russia’s financial elite, following earlier protests from celebrities and sportspeople.
The billionaire Russian businessman Mikhail Fridman, who was born in Ukraine but made his fortune in Russia after the Soviet Union collapsed, told his staff in a letter that the conflict was a tragedy for both countries.
“This crisis will cost lives and damage two nations who have been brothers for hundreds of years,” he wrote in a letter seen by the Financial Times that did not criticise Putin directly.
Oleg Deripaska, an oligarch and ally of the Russian president, tweeted: “Peace is the priority. Negotiations must start ASAP.”
On the same day, the government in Belarus claimed that a referendum had approved constitutional changes, revoking its neutrality and its nuclear-free status. The changes would allow Russia to station nuclear weapons on Belarus territory.
The Russian invasion has left hundreds dead. Russia has launched missile strikes against buildings in Kyiv, Kharkiv and other major Ukrainian cities as it threatens an all-out assault not seen since the second world war.
Kharkiv residents were urged to stay indoors by its governor, Oleg Sinegubov, who said: “there has been a breakthrough in light equipment including in the central part of the city”. A nine-storey building was reportedly hit, with one woman killed.
(Photo: Ukrainian troops inspect the site following a Russian airstrike in Kyiv, Ukraine.)