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February currency review

The Russian rouble fell 8% against the euro in February and has slumped a further 13% since. Actions, especially deadly ones, such as invading Ukraine without provocation, have consequences thankfully. 

Those consequences already include a huge array of sanctions against Russia from governments and businesses across the world. Among other punitive measures, Russian airlines can no longer fly in European or American airspace; Russia can no longer easily settle payments in foreign currencies, limiting its ability to buy imports and sell exports; and Russia's financial assets and foreign exchange reserves have been frozen by numerous countries united in their abhorrence of Putin's actions - an abhorrence we wholly share. The rouble has dived in response, threatening even more rapid inflation and forcing the central bank to more than double interest rates - a move which might well stabilise the currency (although it hasn't yet) but which will also further stunt economic growth at a time when a double-digit contraction is already forecast.

The bank must halt the rouble's slide or the economy could suffer even worse harm. It would like to intervene in markets by selling foreign currencies and buying roubles, but sanctions largely prevent this method of strengthening the local currency. Capital controls have therefore been introduced to stop money fleeing the country - please note, remitting funds out of Russia is no longer possible. There is a risk that the bank may have to freeze foreign-exchange deposits, including those of any remaining expatriates. That would seriously complicate things for international employers trying to pay foreign staff in Russia. Furthermore, injecting hard currencies into the Russian banking system for this or any other purpose might now be illegal under sanctions. Remuneration within Russia will have to be in roubles, which of course have lost considerable value.

Meanwhile, international businesses and other organisations are also hitting Russia where they can. Oil and gas companies are pulling out, as are other foreign investors. The current exodus of foreign talent from Russia could become a rout. Google Pay and Apple Pay are no longer available there; and Visa and Mastercard credit card payments may soon be impossible. With the rouble having lost value, reports show big queues at ATMs as people try to withdraw local currency, presumably intending to convert it to dollars or euros. That many ATMs are reportedly not being replenished once empty suggests authorities are desperately trying to stop people from withdrawing funds from the banking system.

For most people living in Russia, who have already struggled through years of austerity, life is rapidly becoming more difficult. With the likelihood of goods shortages worsening and prices rising much faster, things are almost certain to get worse. Some analysts suggest the coming crisis will be worse than the devastating one Russia suffered in the early 1990s after the fall of Communism, when people resorted to bartering for goods and services.

Unfortunately, Russia's criminal aggression in its supposedly "brotherly nation", is not just hitting its own currency but also dragging others down with it. Those of Belarus, Georgia, Kazakhstan, Kyrgyzstan and, of course, Ukraine, all plummeted in February (see first table) and have fallen further in early March. All of these countries are already suffering from high inflation, which will at least partly offset the impact of exchange rate changes in terms of expatriate cost of living. Although these former parts of the Soviet empire are now supposedly independent states, their economies remain reliant on strong links with Russia, so any deterioration in the 'mother' economy is certain to hurt them too. At the very least they are likely to suffer from reduced remittances from their nationals in Russia.

As for Ukraine, the consequences of Russia's actions are dire, and the loss of life unforgivable. The economy has all but stopped functioning and there has already been massive destruction of roads, bridges, power generation, airports, rail networks and other infrastructure. If Russia succeeds in taking over the entire country, probably then installing a puppet president to rule, it is hard to see the Ukrainian people being willing to help such an illegitimate leadership to rebuild the country. They may instead choose to devote their energies to defiance, disruption and sabotage, and who could blame them?

Countries experiencing largest currency losses in February


Currency code Movement v EUR
31 Jan - 28 Feb 2022 (%)
Belarus BYN -6 10.5
Georgia GEL -8 13.9
Ghana GHS -8 13.9
Kazakhstan KZT -7 8.5
Kyrgyzstan KGS -8 11.2
Russia RUB -8 8.7
Seychelles SCR -8 3.9
Ukraine UAH -5 10.0
Zimbabwe ZWL -6 60.6

Defying expectations, the Lebanese pound continued to strengthen in February (see next table), gaining 8% against the euro (although, please note the gains made do not relate to the massively overvalued and still fixed 'official' exchange rate, but rather to the more meaningful 'Sayrafa' rate, which appears to tack closely to fairer-value black-market rates now). The stabilisation of the currency appears to be helping to stabilise inflation too; although it continues to increase, it is doing so more slowly at last. 

Countries experiencing largest currency gains in February


Currency code Movement v EUR
31 Jan - 28 Feb 2022 (%)
Angola AOA +5 30.4
Brazil BRL +4 10.1
Iran IRR* +6 35.9
Lebanon LBP** +8 239.7
Uruguay UYU +4 8.0

* Open-market rate

** Sayrafa rate

Finally, here is this month's selected currency movements table:

Selected currency movements (v EUR)
Country Currency code % movement to 28 February 2022 v EUR since: Latest official annual inflation (%)
(1 month)
(3 months)
(6 months)
(12 months)
Argentina ARS -3 -6 -5 -10 50.9
Australia AUD +2 +1 +4 0 3.5
Brazil BRL +4 +8 +6 +13 10.1
Canada CAD -1 0 +4 +7 4.8
Chile CLP -1 +2 +2 -4 7.2
China CNY 0 +2 +7 +10 1.5
Egypt EGP -1 0 +4 +7 5.9
India INR -1 0 +3 +5 6
Indonesia IDR 0 +1 +5 +7 2.2
Japan JPY -1 -1 0 -1 0.5
Kenya KES -1 -1 +1 +4 5.4
Korea Republic KRW 0 0 +2 +1 3.6
Mexico MXN +1 +7 +4 +9 7.1
Nigeria NGN -1 -1 +4 -1 16.2
Norway NOK 0 +2 +3 +4 3.2
Philippines PHP -1 -1 +2 +3 3
Poland PLN -1 +1 -1 -3 9.2
Russia RUB -8 -10 -8 -4 8.7
Singapore SGD -1 +2 +4 +6 4
South Africa ZAR +1 +6 +2 +6 5.7
Sweden SEK -1 -3 -4 -5 3.7
Switzerland CHF 0 +1 +4 +5 1.6
Turkey TRY -3 -13 -37 -44 48.7
United Kingdom GBP -1 +1 +2 +4 5.5
United States of America USD -1 0 +5 +7 7.5
Venezuela VES +3 +5 -1 -54 686.4
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