Bad news for the Russian economy. The national currency, the ruble, crosses the 100 threshold for the US dollar. This is a new low since the start of the conflict in Ukraine, bringing the year-to-date loss to about 38%. The collapse came despite the measures taken by the Central Bank of Russia to stop its devaluation. The ruble hit 100.18 units per dollar on Aug. 14 today, the lowest since the end of March 2022.
extraordinary meeting
Therefore, the Central Bank of Russia, led by Elvira Nabiullina, announced an emergency meeting on 15 August in anticipation that it could raise the reference interest rate to stabilize inflation. But he also explained that the collapse of the ruble does not pose a threat to the country’s financial stability. After the announcement of tomorrow’s meeting, the dollar fell below 99 rubles and the euro below 108.
The Russian currency hit its lowest level on March 11, 2022, two weeks after the start of the war in Ukraine, when it fell to 120 rubles per dollar. The Russian currency also continued to weaken against the euro, hitting 109.81 rubles, the lowest level since March 23 last year.
Russia’s Central Bank had decided to raise the interest rate by 100 basis points to 8.5 percent last month, but today President Vladimir Putin’s economic adviser, Maxim Oreshkin, called for a new intervention, saying it was “the main reason for the ruble’s weakening”. and accelerating inflation is a soft monetary policy”.
“A weak ruble – Oreshkin insisted in an interview with Tass – complicates the structural transformation of the economy and has a negative impact on the real income of the population”. “It is in the interest of the Russian economy to have a strong ruble,” said Putin’s adviser. The Central Bank of Russia explained that the weakening of the national currency was due to the sharp fall in the current account surplus.
because it happens
The Russian version does not take into account external factors such as the war in Ukraine. Beyond the words of Putin’s economic adviser, there are a number of factors that led to the fall of the ruble. These include above all international sanctions, but also reduced revenues from oil exports, erratic money flows, capital flight, declining demand from major export partners such as China and India, and a crisis in domestic affairs.
Since the attack on Ukraine in February 2022, the ruble has been on a volatile course. It fell to 120 against the dollar, then recovered in the summer of the same year, reaching the highest levels of the last seven years thanks to the very high energy prices and the interventions of the Central Bank that raised the interest rates to 200 million. 20 percent and imposed tight capital controls. Finally, since the beginning of this year, the national currency has weakened again by around 25 percent.
Source: Today IT
Karen Clayton is a seasoned journalist and author at The Nation Update, with a focus on world news and current events. She has a background in international relations, which gives her a deep understanding of the political, economic and social factors that shape the global landscape. She writes about a wide range of topics, including conflicts, political upheavals, and economic trends, as well as humanitarian crisis and human rights issues.
