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Michaël van de Poppe - 23 March 2022

Sanctions on Russia: the other side of the story

In last week’s blog, we discussed the impact of the war on Ukraine on other financial markets. The focus was mostly on the US. If you missed this post you can read it here. In this week’s post, the focus will be on Russia. 

Russia is facing MAJOR economic backlash for its decision to wage war on Ukraine. The Russian invasion is condemned globally with the exception of some countries that seem to have taken the side of Russia, e.g. Syria and North Korea. 

Putin put out a stark warning to whoever plans to intervene: “whoever tries to impede us, let alone create threats for our country and its people, must know that the Russian response will be immediate and lead to the consequences you have never seen in history.” His warning was directed to the North Atlantic Treaty Organization (NATO), an intergovernmental military alliance among 28 European countries (note that Ukraine is not among the member states). 

For now, no country has sent direct military aid to Ukraine, however, Russia is facing major economic backlash in the form of economic sanctions. These sanctions are considered to be a ‘financial nuke’ for Russia as their economy is massively affected by the measures. 

Every day, new companies, new countries, new organizations are cutting ties with Russia and announcing new sanctions. It’s a continuous piling of economic measures aiming to force Russia to stop their military efforts in Ukraine as well as showing contentment for Russia’s decision to continue their war-waging. 

The list of some of the sanctions

  • Major assets freezes for russian oligarchs + asset seizure (especially yachts)

  • Airplane/flights/airlines banned from russia + boeing suspends operations in russia

  • EA removes Russian teams from their games

  • Mastercard and visa blocking banks

  • Disney not rolling out new content for Russian customers

  • Warner Brothers/Paramount postponing movie releases

  • Netflix also no more content

  • Various sports organizations suspending russian players and removing teams from competitions + no longer hosting competitions in Russia

  • Russia removed from SWIFT

  • Apple stops selling and so much more

It seems that the whole world is turning its back to Russia and are boycotting the country in hopes of turning the citizens of Russia against their ‘government’/Putin. 

Now, let’s take a look at how the Russian markets are behaving as these sanctions were rolled out against them. 

The Ruble

Let’s start with a banger. The Russian Ruble. This is the official Russian national currency and one of the oldest currencies still in circulation. The Ruble has been around since the 14th century. The Ruble has seen it all, many stock market crashes, the fall of the Soviet Empire, and still figured out a way to not go into extinction.

Due to the sanctions, many foreigners (and Russian citizens) are losing confidence in the currency. This has led the Ruble in free fall ever since the lead-up to the initial ‘peace mission’ in Luhansk and Donetsk.

The chart shows it all. The Russian Ruble is printing huge red (or green candles depends on RUB/USD or vice versa) all within a week. The currency lost roughly 30% of its value in under a week. This has a huge impact on the Russian economy as this means that importing is now 30% more expensive than before. Additionally, the savings of many households in Russia have lost a significant amount of value. 

Numbers like these are quite common in crypto. Such as shitcoins evaporating in value every day. However, for a major national currency to have these numbers is a real concern for its everyday users. If we combine this with the fact that Russian banks are cut off from SWIFT and blocked from VISA and Mastercard, things are only getting worse. 

The Sberbank & MOEX

SWIFT is a global messaging system for banks and other financial institutions that enables bank transactions. It is a crucial tool for financial institutions worldwide as it facilitates secure and immediate transactions. In total over 11,000 major financial institutions worldwide are connected to SWIFT. Think of commercial banks, central banks, and other financial coordinators. 

SWIFT is basically the gate for connected institutions to international markets. The fact that several Russian banks are blocked from using this tool means that it is almost impossible for them to borrow or invest money across the globe. It also became way harder to pay for debts, receive cash for exports and pay for imports. The largest Russian bank affected by these measures is Sberbank which handles most of Russian oil and gas transactions. 

In hopes of saving their markets, Russia announced the halt of all trading on their public markets on Monday. This did not stop the onslaught as other markets were still open and SBER stocks plummeted. What you are about to witness is not a Uniswap rug pull, but a legitimate company that reported back in the summer of 2021 to have a size of 10 trillion in Ruble under investment management.

From the previous high in October of last year, Sberbank lost close to 97% in value. It plummeted from $20.8 to $0.50. This signals the power of the sanctions taken by the world and the effects it has on Russian companies.

Sberbank is not the only Russian stock tumbling down. All the Russian stocks have taken a hit as both foreign and domestic investors are pulling capital out of the Russian stock market. The Moscow Exchange has corrected over 40%. It got so bad that the government decided to close all stock trading until at least March 9th. Previously it was 3 days, but the period was extended by almost a full week.


On the other hand, the whole world is affected by the price surge of some commodities. Russia is one of the biggest oil and gas exporters in the world. Many countries and companies are no longer importing those commodities from Russia as a form of protest. This results in huge price increases and volatility. 

Crude Oil hit a price of $108 per barrel. This is near the 2008 levels when oil made new all-time highs as a consequence of the financial crisis. This time around investors, traders and other entities are anticipating an oil supply disruption. Natural gas futures also have been skyrocketing upwards. 

Did you also know that Ukraine and Russia combined, account for about 29% of global wheat exports, 19% of corn exports and 80% of world sunflower oil exports to be more precise! Let it be no surprise that in these markets there is also fear of supply disruption. Wheat futures have been on a tear and are also nearing 2008 price levels. 

Globally these effects are going to cause price increases on consumer goods as the prices of these commodities keep increasing. 


The economic sanctions that are taken by the European Union, the US, and all other organizations are going to strike the citizens of Russia really hard. They are in the process of getting cut off from the international trade and money market. The blocking of Russian banks from SWIFT is extremely harmful as they are no longer able to communicate with other banks or financial entities and are no longer able to make cross-border payments. It will be harder to make crucial payments and these banks are more likely to miss important deadlines for debt payments. 

The Russian elite, especially the oligarchs, are also the focus of the sanctions. Many countries have announced that they are freezing the assets of certain wealthy Russian oligarchs and are even looking to seize them in an attempt to stop the war in Ukraine. Oligarchs have a lot of influence in the Kremlin and some of them are in direct contact with Putin. 

The sanctions are unfortunately also a double-edged sword as it causes the wheat and oil prices to skyrocket. These consequences will be felt by everyone as most consumer goods are getting more expensive by the day. 

All in all, this war is going to have huge consequences in the short to midterm.