Tokyo: The Russian Ruble fell below 1 US cent, a record drop of 26 per cent, on Monday after the country got cut off from the global bank payments system as retaliation to its invasion of Ukraine, Associated Press reported.
Post the drop, Ruble reached 105.27 per USD, while it was 84 per USD late on Friday.
The United States, Japan and many Western countries have moved sanctions on Russia over the weekend, which included restricting certain Russian banks' access to the SWIFT global bank payment system.
The restrictions aim to hinder the Russian central bank from accessing the more 600 billion USD reserves the Russian administration has. It will bind Moscow's ability to support the Ruble, which fell to its lowest last week.
The fall in the currency is supposed to shoot up inflation in Russia and affect the people. Earlier sanctions on the superpower had only targeted elites, but the current one will affect every citizen. This might result in political unrest in the country if sanctions deliver the expected impact. Analysts have predicted intensifying runs on banks by Russians and falling government reserves as people hastily sell their targeted currency for safer assets.
The SWIFT financial messaging system moves billions of dollars around 11,000 plus banks and other financial institutions globally. In 2014, allies on both sides of the Atlantic had planned a similar sanction when Russia annexed Crimea from Ukraine and fueled separatists in Eastern Ukraine. But Moscow threatened then that kicking it out of SWIFT would invite war, and allies dropped the attempt. Though Russia tried to erect its financial transfer system after that, it failed.
However, the sanctions on SWIFT was partial, and officials informed that they had not decided on cutting off which banks. They only aim at targeted functional restrictions, they said.