Russia's ruble sinks to 2022 March levels after US sanctions on Gazprombank

Russia’s ruble took a blow following the news of the U.S. imposing sanctions on 50 Russian banks, including Gazprombank, hitting 108 against the U.S. dollar during early morning trade on Nov. 27.

The U.S. Treasury Department imposed sanctions on dozens of Russian banks, including Gazprombank, securities registrars, and financial officials on Nov. 21, sending the U.S.  dollar to a more than two-and-a half year high against the rouble.

Until now, the U.S. had avoided targeting Gazprombank in order to enable European countries to continue paying for Russian gas supplies, as the bank serves as the main conduit for energy-related payments, the Financial Times reported.

With this channel closed, international payments for Russian oil and gas will be harder, drying up a part of the Kremlin’s foreign currency revenue. This caused the ruble to weaken above the psychological barrier of 100 to the U.S. dollar.

Gazprombank, partially owned by Russia's state-run energy giant Gazprom, was also used to purchase military equipment, pay soldiers, and compensate the families of those killed in the war in Ukraine.

The ruble is expected to weaken further with the beginning of the winter holiday season, as companies have to import more goods from abroad to satisfy increased consumer demand.

Opinion: Russia is leveraging gold and working with China to bypass Western sanctions

Since the West imposed unprecedented economic pressure on Russia following its full-scale invasion of Ukraine, the country’s trade practices have undergone a dramatic transformation, with Russian international trade increasingly occurring in the shadows. Access to the goods it needs now depends on c…

The Kyiv IndependentFrancesca Ghiretti