The Russian rouble has plunged to its lowest level against the dollar since the immediate aftermath of the full-scale invasion of Ukraine in March 2022.
The ruble hit 113 against the US dollar on Thursday. On Wednesday, Russia's central bank announced it would stop foreign-currency purchases to try and strengthen the currency and ease pressures on financial markets.
The ruble has been sliding since late summer, falling by more than a third since August. Oil prices have fallen in the same period, hitting Russia's earning capacity from its most important commodity.
That has piled pressure onto a war economy already struggling under the weight of soaring inflation. President Vladimir Putin has dramatically ramped up military spending over the past 18 months, in an attempt to gain the upper hand in the war in Ukraine.
Defense spending has more than tripled since 2021 and is set to be a record 13.5 trillion ruble ($122 billion, €102 billion) in next year's budget, another huge 25% hike. The country's central bank estimates inflation hit 8.5% this year, double its target. Interest rates are also at record highs, hitting 21% in October.
However, the sharp ruble plunge of recent days is linked to sanctions placed by the US on Gazprombank on November 21. Gazprombank was one of the few major Russian banks not previously hit by sanctions and had become the key platform for Russian energy payments and its main gateway to the global finance system. Banning Gazprombank from the US-dominated global financial system limits the Kremlin's capacity to fund its........