The US sanctions imposed on Gazprombank in November 2024 have significantly weakened the Russian economy, leading to a steep decline in the ruble. According to the UK Ministry of Defence, these measures are worsening economic imbalances in Russia, exacerbated by inflation, labour shortages, and high government spending.
In response to the sanctions, the Central Bank of Russia (CBR) attempted to stabilise the situation by halting foreign currency purchases until 2025. However, these efforts have proven insufficient, with the ruble remaining above 100 per US dollar since late November. On December 20, the CBR chose to maintain its key interest rate at 21%, the highest since the war’s start in 2022, in a bid to manage inflation and economic overheating.
The ruble’s collapse is linked to the November 21 announcement of US sanctions targeting Gazprombank. The sanctions prohibit the state-controlled financial institution from conducting new energy-related transactions involving the US financial system. President Joe Biden, nearing the end of his term, implemented the sanctions to tighten the pressure on Moscow over its invasion of Ukraine.
By mid-November, the ruble plummeted to its lowest value against the US dollar since 2022, reaching 114 per dollar. Businesses in Russia have expressed growing discontent over high interest rates, which critics say are stifling economic growth while inflation continues to rise.
| Timeline of Key Events | Action |
|---|---|
| October 2024 | CBR raises interest rates to 21% |
| November 21, 2024 | US imposes sanctions on Gazprombank |
| November 2024 | Ruble hits 114 per dollar |
| December 20, 2024 | CBR halts foreign currency purchases and keeps interest rates at 21% |
Despite the CBR’s measures, the UK Ministry of Defence predicts further economic instability, citing the ruble’s depreciation and structural challenges in Russia’s economy. Sanctions targeting Gazprombank, a cornerstone of Russia’s energy financing, have crippled Moscow’s access to key international markets.
