Economic Impact of the Russo-Ukrainian War
On the investment side, the Russian stock market index fell 20 percent in one day, causing the Russian stock exchange to be closed temporarily. Russian banks have been excluded from the SWIFT international payment system
People wave Russian national flags celebrating the recognizing the independence in the center of Donetsk, the territory controlled by pro-Russian militants, eastern Ukraine, late Monday, Feb. 21, 2022. In a fast-moving political theater, Russian President Vladimir Putin has moved quickly to recognize the independence of separatist regions in eastern Ukraine in a show of defiance against the West amid fears of Russian invasion in Ukraine.
Russia’s war on Ukraine has caused uncertainty in the global economy. Russia has received a series of economic sanctions from Western countries following its attack on Ukraine, which began on 24 Feb.
The Russian ruble fell 60 percent to 130 rubles per US dollar last week from 84 rubles per dollar before the attack. The collapse of the ruble pushed down the yield on Russian government bonds (10 years) from 12 percent to 19 percent in March 2022. In comparison, the yield on Indonesian government bonds (10 years) is now 6.9 percent. In order to maintain the value of the ruble, the Central Bank of Russia drastically raised interest rates from 9.5 percent to 20 percent. For comparison, Bank Indonesia's interest rate is 3.5 percent.