Ruble plunges to record low after Russia invades Ukraine
Russia's invasion of Ukraine and the corresponding sanctions have triggered a sell-off in the ruble.
Driving the news: The currency has dropped to a record low against the dollar, falling roughly 6% over the last two days.
- The ruble is down about 19% against the dollar since last October.
How it works: The ruble/dollar exchange rate is conventionally expressed as the number of rubles that you can purchase with a single dollar — so a higher number means a weaker ruble.
Why it matters: The sell-off means investors think ...
- Sanctions announced Tuesday by the U.S. and its allies will bite the Russian economy. Or...
- Heavier sanctions are coming, after Russia advances its invasion into Ukraine. Or...
- Both of the above.
Details: A weaker currency effectively raises inflation — because imports get more expensive — and will likely hurt Russian consumer confidence.
Yes, but: Don't expect a bit of inflation to dissuade Russian President Vladimir Putin from his military objectives.
- Russia isn't a democracy. He doesn't have to worry about a sour mood among the voters unless things get so bad that people take to the streets.
The bottom line: Sanctions are going to hurt the Russian economy. But don't bet on them influencing the man in charge.