The fall of the Russian national currency, the ruble, continues. On Tuesday, the first low point since March 2022 – shortly after the outbreak of war – was reached, the decline is now continuing: currently one ruble corresponds to exactly one euro cent.
The coin is thus further away from the highs of the previous year. While the ruble initially collapsed in 2022 immediately after the start of the offensive war against Ukraine ordered by Kremlin chief Vladimir Putin, it rose sharply later in the year. One reason for this was Western sanctions, which initially restricted imports while Russian exports continued.
Crash due to falling exports
However, with the restrictions on oil exports and the introduction of a price cap for Russian oil, Russian export earnings fell in 2023. The Russian central bank attributes the fall in prices to this decrease in the trade surplus.
Unstable situation due to power struggle
But observers also see political instability in Russia as a reason – made evident by the failed uprising of mercenary leader Yevgeny Prigozhin. A connection is “highly plausible,” Janis Kluge, an expert on the Russian economy at Germany’s Institute for International and Security Affairs, told the New York Times.
It is not surprising that the effect of the domestic political unrest on the ruble only became apparent weeks later. “Capital mobility is limited in Russia; it is not so easy to get large sums of money abroad quickly,” explains Kluge.
Another crash is imminent
During the Prigozhin Rebellion, the exchange rate for rubles to dollars and other foreign currencies in Russian online banking applications skyrocketed. Customers apparently tried to get their money out of the Russian currency. If the ruble continues to fall now, more Russians may be tempted to exchange the ruble for other currencies, which could lead to another drop.
In any case, the Russian central bank is trying to calm down: the current development of the ruble does not pose a threat to the country’s financial stability, deputy central bank chief Xenia Judaeva said on Tuesday. For the time being, therefore, exporters will no longer be obliged to exchange their foreign exchange earnings for rubles, as was sometimes the case last year.
The central bank boss is relaxed
Elvira Nabiullina, head of the central bank, followed on Thursday. Tools are still available to influence the ruble, she said at a conference. A floating exchange rate is still good for the country and helps the Russian economy to absorb external changes and shocks more easily.
Source: Krone
I am Wallace Jones, an experienced journalist. I specialize in writing for the world section of Today Times Live. With over a decade of experience, I have developed an eye for detail when it comes to reporting on local and global stories. My passion lies in uncovering the truth through my investigative skills and creating thought-provoking content that resonates with readers worldwide.
