The Russia-Ukraine tension is the talk of the hour, but the countermeasures taken are causing quite a movement in the market. Where a dip was seen in the share and crypto market, the inflation is rising too.
In just five days, tether (USDT), a US dollar-pegged stablecoin, has seen a 30% increase in value against the Russian Ruble. The hike highlights the negative and immediate impact of the ongoing war on the traditional financial system.
USDT price movement
The Ruble is experiencing inflation, according to data from Cointelegraph Markets Pro and Binance. The statement is made as the USDT/RUB trading pair crossed 105 rubles for the first time in history.
The USDT/RUB pair traded at a relatively stable market price below 80 Rubles before the spike. However, following the start of the Russia–Ukraine conflict on Thursday, the Ruble’s market price against the US Dollar soared, briefly exceeding 90 Rubles.
Reason behind spike
Tether’s USDT stablecoin is currently trading at a 5% premium on Ukraine’s popular crypto exchange Kuna, according to CoinGape. Ukraine’s central bank has banned the issuance of foreign currency at the retail bank and restricted the country’s cash transfer system.
As a result, Ukrainians have begun to rely on cryptocurrency for their daily transactions. Michael Chobanian, the CEO of Kuna, stated that the value of Ukraine’s local currency is low and that trust in the banking system has eroded. “The majority of people have no other option than to use cryptocurrency,” he added.
Impact on Ruble
Inflation has eaten away the Ruble’s value, which has continued to lose 30% of its purchasing power.
The Russian central bank doubled key interest rates from 9.5 to 20% on Monday as an immediate countermeasure to the rising inflation of its fiat currency.
Furthermore, as threats of a complete international financial ban loom, the Russian government has asked Russian companies to sell 80% of their foreign currency revenues.
While inflation is creating concerns, the crypto exchange in Ukraine has witnessed a tremendous spike. Unfortunately, the market volatility is expected to stay until Russia and Ukraine’s tension is not over.