Project SyndicateProject Syndicate

The Russia sanctions are working

By Sergei Guriev

22 Aug 2023 · 4 min read

informed Summary

  1. The ruble's recent depreciation has highlighted just how much pressure the war–and the sanctions imposed in response to it–has placed on Russia’s economy, Sergei Guriev writes in PS.

PARIS – Within days of Russian President Vladimir Putin’s full-scale invasion of Ukraine 18 months ago, the West imposed unprecedented sanctions on Russia’s central bank, freezing hundreds of billions of dollars of its assets. The ruble plummeted, reaching a record low of 150 to the US dollar a week after the invasion. But after the central bank imposed currency and capital controls, the ruble bounced back, strengthening to ₽51.5/dollar – a recovery that the Kremlin eagerly touted.

Russia’s leaders have less to celebrate today. The ruble exchange rate offers the most visible indication of Russia’s economic performance, at least for Russian households. So, the currency’s recent dip below the politically important threshold of ₽100/dollar has made the Kremlin nervous. And it has put the central bank – which, over the last year, has loosened or removed many of its capital controls – under fire.

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