As a result of the conflict in Ukraine, many Western countries including the United States have enacted sanctions on Russia. Sanctions are financial penalties that in this case, are used to disincentivize Russia from sending military invasions to Ukraine. The United States has halted certain Russian imports and exports, and many U.S. companies have stopped all operations in Russia as well. The sanctions enforced by the United States are particularly impactful due to the prevalence of the U.S. dollar in international trade.
While these financial penalties are directed only towards Russia, the effects can be felt all across the global economy. The price of grain has increased dramatically, as Ukraine is one of the largest supplies of wheat and grain. The price of crude oil is the highest it has been in eight years, as Russia is the worlds second largest producer of oil. Gasoline prices in the U.S. reached an all-time high of an average $4.42 per gallon on May 12.
The stock market has dropped dramatically as a result of these sanctions as well. In April of 2022, the Nasdaq went down 4.2%, S&P went down 9.1%, and Dow dropped 2.8%. These dips mark the worst April that the stock market has seen in decades. As a result, many Russian citizens are turning to gold for financial stability, increasing the price of gold across the globe.
Cryptocurrency has seen inconsistencies as well, with Bitcoin prices dropping 9% in the first week of the conflict in Ukraine, then rebounding up 10% in the following weeks. While cryptocurrencies have become more volatile, expect them to make a return to stability and be used in novel ways. Experts predict crypto will be used as an incentive for Russian surrender, and as a way to financially support Ukrainian troops.