as Markets opened in panic on MondayMany Russians rushed to local cash points in Moscow to redeem their savings before the damage got worse.
“He said they had dollars, so I came here right away,” said Alexei Presnyakov, 32, referring to an app of Russia’s Tinkoff Bank, noting that it could withdraw hard currency. About 20 people queued. “yesterday [the rate] was 80 [to the dollar]. Today it’s 100. Or 150.”
“I just made a spontaneous decision today that I will ask for [out of work] “I’m walking around until I got all my money out,” he said. Before that it was zero.
But within minutes, word moved further down the queue: The dollars were lost.
Almost half of the queue was out. “Who needs rubles?” Said a woman sarcastic as she turned away.
From shopping malls to corporate boards, Russians were trying to find a foothold on Monday in what the Kremlin described as the “changing economic reality” the country was now facing after sanctions against Russia’s central bank and other major financial institutions. There were signs of something unusual happening: the Moscow Stock Exchange, the largest stock market in Russia, stopped trading until March 5.
With its reserves frozen, the central bank announced that it would double key interest rates to 20%, the highest this century, and force major exporters, including major energy producers such as Gazprom and Rosneft, to sell 80% of their foreign currency. Revenue, by effectively buying the ruble to support the currency rate.
But that did little to calm frayed nerves in Moscow’s Metropolis Mall, where signs emerged that Russians were rushing to funnel their cash into consumer goods before prices rose. At M.Video, a popular electronics store, an employee said that ruble prices for iPhones were “the same at the moment” but that they “could change at any moment.” He said, “I’ll buy now.”
If there was shock in the streets, the mood among the business community was even more dire. Many owners of medium-sized companies said that the invasion and subsequent isolation of Russia made their business unprofitable overnight.
One of them, who is the owner of an advertising services company with 100 employees, said that he was about to announce to his employees this afternoon that he was leaving the country for Armenia with his wife and two sons.
“I will tell them that we are going through a crisis that we have not seen before,” he said. “It’s like flying on a plane without engines or engines igniting.”
His company, which handles contracts for international brands like Pepsi and automakers like Volkswagen, was booming as recently as January 2022, a record month for them. Now many of these brands have withdrawn from the Russian market and his business has “dramatically” shrunk.
Another employer with hundreds of employees in the food, beverage and tourism industries felt that it did not fully know the future under Vladimir Putin.
“We have no idea what he’s going to do next,” he said. “Nobody in the business community has proof anymore. Everyone is so depressed. I’ve had a lot of economic crises here, and the pandemic has been the most recent.”
“But there was always a reason to keep fighting for your work,” he said. “Now, I no longer see the light at the end of the tunnel. Even if peace is achieved, the damage is done. How do we reverse it?”
On Monday there was a sense that this crisis was passing a point of no return, as Russian bombers began flying over Ukraine and Rocket shells began firing at populated areas in KharkivA city with a population of more than one million people.
Even the big Russian businessmen, including the powerful oligarchy, seemed unsettled by the instability caused by the invasion, as well as by the extraordinary measures being taken to prop up the ruble.
Billionaire businessman Oleg Deripaska had called for peace “as soon as possible” in a post on Telegram on Sunday. On Monday, he went after the central bank’s decision to raise interest rates, targeting longtime rival Elvira Nabiullina, the head of the central bank.
Deripaska wrote: “High price, mandatory sale of foreign exchange … This is the first test for who will actually be in charge of this banquet.” “I really want clear clarifications and comments on economic policy for the next three months.”
By evening, the answer was more drastic measures, including strict restrictions on transfers of funds abroad. Those sanctions were announced after a funeral meeting between economic officials and Vladimir Putin, who declared that the sanctions had been imposed by the Western “empire of lies”.
For many Russians, who felt European because of the food they ate and the way they lived, Monday clearly represented a moment when the war came home.
“I think people will be afraid to spend money,” said the businessman who owns restaurants and tourism companies. “We left communism 30 years ago, and we are used to having a lot of amenities that we also see in the West. All this progress can disappear. We are no longer members of the international community.”
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