Western sanctions as well as a deplatforming of key Russian financial institutions from SWIFT have rocked Russia’s financial system and triggered a spiral in the ruble, drawing the central bank into an emergency doubling of interest rates.

The Russian Ruble fell as low as 111 to the U.S. dollar from 83 on Friday put the Ruble at under a penny, a drop of more than 20% before recovering slightly, on track for its biggest single-day fall on record. Russia’s central bank has made every move possible to slow trading out of the Ruble to stop the bleeding, with local onshore markets frozen by the central bank and markets outside Russia reluctant to trade the currency at volume in effort to wait out losses.

The Bank of Russia took a raft of measures early Monday to protect Russia’s banking system. It raised benchmark rates to 20% from 9.5% in an attempt to attract savings into banks, the largest of which were targeted by Western sanctions and will be all but cut off from international markets.

The bank delayed trading on domestic debt and currency markets, making it difficult to assess where the ruble would end up. The central bank blocked the opening of the stock market. It also ordered Russian companies, some of which generate sales for energy products in dollars, to sell 80% of their foreign-currency revenue. The move will create demand for rubles and prevent companies from hoarding dollars.

Investors increasingly priced the chance that Russia won’t be able to, or won’t be willing to pay off its foreign debts. The yield on a Russian dollar bond maturing in June 2027 jumped to more than 24% Monday from just under 10% Friday.

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Source: Wall Street Journal