The Russia-Ukraine conflict has influenced the global economy. The US and its allies have started the financial war against Russia by launching a series of unprecedented sanctions. The West froze foreign reserves at the start of 2022, expanded banking restrictions, and removed Russian banks from Swift, a company used for cross-border payments. U.S. companies have suspended operations in Russia and companies attempting to continue business operations cannot send capital or take profits out. Sanctions are a non-military option to influence geopolitical events and are applicable beyond the enforcing of a nation’s borders.
Sanctions can be ineffective because they must be applied aggressively to prompt change and often affect vulnerable populations more than the target government. Russia is deeply integrated into global markets and this sudden economic isolation may have massive impacts around the world. Russia has taken aggressive action to try and stabilize its currency in the face of sanctions. Concerned Russian citizens began to invest in gold and other precious metals for some sense of financial security.
How does this conflict impact your finances? The United States imposed restrictions on exports and oil imports. Russia is the 2nd highest producer of crude oil in the world, so gas prices have risen. Ukraine is one of the world’s largest producers of wheat and grain, so you can expect higher prices for grain, beer, bread, and more. Gold is often considered a low-risk investment in times of market volatility, and gold can be a great hedge against uncertainty.