Market Volatility, Sanctions, and the War in Ukraine

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Market Volatility, Sanctions, and the War in Ukraine

War has historically led to economic downturn and volatility and the war in Ukraine is no different. The West, through sanctions, is taking action against Russia’s invasion. This comes in the form of removing Russian banks from SWIFT, stopping Russia’s international payments. It comes in the form of the U.S stopping all oil imports from Russia, weakening their largest export. And it comes in the form of freezing Russia’s reserves in other countries, isolating half of Russia’s total reserves.

These efforts have led to an expected 15% downturn in the Russian economy in 2022. This is a major dip for any nation’s economy and Russia saw their currency, the ruble, drop 30% as the sanctions were announced. 

In response drastic actions were taken to stabilize this currency. This was accomplished through a 10.5% increase in interest rates, forcing Russian firms to translate 80% of their USD into rubles, and stopping all Russians from sending money abroad. These are likely unsustainable measures but did serve to stabilize the economy. 

Aside from Russia, economic issues are arising in other nations. The U.S is seeing the highest recorded gas prices, historic stock market lows, and widespread inflation. Gold is at an eight month high, signaling high market volatility, and crypto is similarly volatile as of late.
These are the effects that are expected as a major war arises. Sanctions hurt the desired nation at the expense of the global economy at large. Individual companies are even suspending operations in Russia. Overall the average citizens are the ones most harshly affected, and that’s the cost of war.