The rouble’s collapse compounds Russia’s isolation

ON MONDAY, as financial markets began trading in Asia, the value of the Russian rouble collapsed. The cause was harsh introduced over the weekend. In effect these freeze Russia’s foreign currency reserves and begin to lock Russian banks out of the SWIFT network for arranging international transactions. The US dollar rose by as much as 40% against the rouble, taking the Russian currency from its Friday closing level of around 84 to the dollar to as high as 118, a new record.The move will be one of the largest one-day slumps in the Russian currency’s modern history, similar in scale to the one-day declines recorded during the worst moments of the country’s financial crisis in 1998, when Russia defaulted on its debt. In mid-morning in Moscow, the Russian central bank raised its key interest rate from 9.5% to 20% in an effort to stem the rouble’s slump, and the country’s finance ministry ordered companies with foreign-currency revenues to convert 80% of their income into roubles.