How Putin’s Invasion of Ukraine Already Cost Russia $10 Billion

Business Insider
Analyzing the top news stories across the web
March 3 2014 12:59 PM

How Putin’s Invasion of Ukraine Already Cost Russia $10 Billion

Russian President Vladimir Putin.
Russian President Vladimir Putin.

Photo by Mikhail Metzel/AFP/Getty Images

This post originally appeared in Business Insider.

The Central Bank of Russia has been forced to intervene in the foreign exchange market today to stem the decline of the Russian ruble, which tanked Monday following an escalation of military tensions on the border between Ukraine and Russia over the weekend.

Advertisement

According to a trader at ING cited by Bloomberg News, the central bank sold more than $10 billion of its dollar reserves this morning in exchange for rubles in the open market in order to prop up the value of the ruble. The IMF estimates that at the end of January, Russia's stock of foreign reserves totaled $457.2 billion.

Basically, when a central bank wants to prop up its currency, it dips into its foreign exchange cash pile and buys its own currency on the open market. The central bank also unexpectedly hiked its key benchmark policy interest rate to 7 percent from 5.5 percent in an effort to stem the ruble's decline.

The dollar is still up 1.4 percent today against the ruble, but the Russian currency has pared losses from earlier this morning when the dollar was up even more. The latest decline in the ruble on the back of escalating military tensions pushes the ruble into territory that the Central Bank of Russia can no longer ignore, given its effect on inflation.

TODAY IN SLATE

Justice Ginsburg’s Crucial Dissent in the Texas Voter ID Case

The Jarring Experience of Watching White Americans Speak Frankly About Race

How Facebook’s New Feature Could Come in Handy During a Disaster

The Most Ingenious Teaching Device Ever Invented

Sprawl, Decadence, and Environmental Ruin in Nevada

View From Chicago

You Should Be Able to Sell Your Kidney

Or at least trade it for something.

Space: The Next Generation

An All-Female Mission to Mars

As a NASA guinea pig, I verified that women would be cheaper to launch than men.

Terrorism, Immigration, and Ebola Are Combining Into a Supercluster of Anxiety

The Legal Loophole That Allows Microsoft to Seize Assets and Shut Down Companies

  News & Politics
Jurisprudence
Oct. 19 2014 1:05 PM Dawn Patrol Justice Ruth Bader Ginsburg’s critically important 5 a.m. wake-up call on voting rights.
  Business
Business Insider
Oct. 19 2014 11:40 AM Pot-Infused Halloween Candy Is a Worry in Colorado
  Life
Outward
Oct. 17 2014 5:26 PM Judge Begrudgingly Strikes Down Wyoming’s Gay Marriage Ban
  Double X
The XX Factor
Oct. 17 2014 4:23 PM A Former FBI Agent On Why It’s So Hard to Prosecute Gamergate Trolls
  Slate Plus
Slate Picks
Oct. 17 2014 1:33 PM What Happened at Slate This Week?  Senior editor David Haglund shares what intrigued him at the magazine. 
  Arts
Behold
Oct. 19 2014 4:33 PM Building Family Relationships in and out of Juvenile Detention Centers
  Technology
Future Tense
Oct. 17 2014 6:05 PM There Is No Better Use For Drones Than Star Wars Reenactments
  Health & Science
Space: The Next Generation
Oct. 19 2014 11:45 PM An All-Female Mission to Mars As a NASA guinea pig, I verified that women would be cheaper to launch than men.
  Sports
Sports Nut
Oct. 16 2014 2:03 PM Oh What a Relief It Is How the rise of the bullpen has changed baseball.