Anuradha Perera
ECONOMYNEXT The Sri Lankan rupee was badly hurt by liquidity injections and has risen sharply to 2.36 rupees for the Russian ruble, up from 2.66 earlier this week, following Vladimir Putin invaded Ukraine, and the EU, UK, US and Canada have declared sanctions against Russia’s central bank.
The nation’s natural resource-rich central bank is among the worst around and has a long history of currency printing and money crisis.
It was the Russian central bank that was run by Tsar Nicholas II between 1905 and 1906 (around Russo-Japanese War) also established modern-day exchange controls following the printing of money-limiting German marks which could be used up to 50,000 per individual.
The inflation caused through the Russian central bank in the period prior the time of World War I helped bring the Bolsheviks into power, according to analysts. In March 1915 alone , the central bank printed one billion rubles. In 2017, the bank printed 50 million rubles per day.
The Ruble has been falling steadily to the Sri Lanka rupee from around 2.90 rupees in October 2021 when it was the Russian Federation economy recovered and companies and people began to invest money.
Modern central banks printing money to prevent the rate of credit from reducing and to prevent the interest rate from rising which causes currency appreciation and inexpensive imports. If the currency is devalued it triggers capital flight and further damages the currency.
The European Union said it will increase sanctions against Putin and his associates, by prohibiting certain Russian banks from making use of SWIFT, the SWIFT message system in order to process transactions across borders and also imposing sanctions on Central Bank in an unusual move.
“First We agree to ensure that certain Russian institutions are removed SWIFT. This will prevent them from operating internationally and stop Russian imports and exports.” Ursula von der leyen
“Second we will block the funds of Russia’s central bank. The bank will be unable to conduct transactions. It will also hinder central banks to Central Bank to liquidate its assets.”
