USDT hits record high against Russian ruble as inflation hits

The dollar-pegged stablecoin Tether (USDT) has surged more than 30% against the Russian ruble in five days, underscoring the negative and immediate impact of the ongoing war on the traditional financial system.

Data from Cointelegraph Markets Pro and cryptocurrency exchange Binance shows that the ruble is experiencing inflation as the USDT/RUB trading pair broke above 105 for the first time in history.

USDT/RUB price performance source: TradingView

Before the surge, the USDT/RUB trading pair maintained a relatively stable market price below 80 rubles. However, the market price of the ruble against USDT skyrocketed on Thursday, exceeding 90 rubles at one point.

As tensions escalated, on Sunday the European Commission announced plans to remove Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT).

Second, we will paralyze the assets of the Central Bank of Russia.

This freezes its transactions.

And it would make it impossible for the central bank to liquidate its assets.

— Ursula von der Leyen (@vonderleyen) February 26, 2022

At the same time, the ruble has seen a decline in value and continues to lose 30% of its spending power - eaten up by inflation.

In an immediate response to rising fiat inflation, Russia's central bank doubled its key interest rate on Monday to 20 percent from 9.5 percent. According to the central bank:

"The increase in the key rate will ensure that the deposit rate rises to the level needed to compensate for rising devaluation and inflation risks. This is necessary to support financial stability, price stability and protect citizens' savings from depreciation."

In addition, the Russian government has demanded that the country's companies sell 80 percent of their foreign exchange earnings as threats related to a sweeping international financial ban prevail.

On the other hand, Bitcoin and altcoin trading volumes on Ukrainian cryptocurrency exchanges have surged by more than 200% amid growing concerns about the stability of fiat currencies.

Trading volume on major cryptocurrency exchange Kuna was less than $1 million on Feb. 21, but soared to nearly $4.1 million in three days, Cointelegraph reported. The National Bank of Ukraine has also imposed cash restrictions, including restrictions on withdrawals, and prohibits cross-border foreign exchange purchases and direct withdrawals.

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