2023-08-14 20:00:05
Russia is suffering in particular from the considerable drop in its sales of hydrocarbons, and from an economy devoted to the war effort.
The Russian central bank has decided to meet urgently on Tuesday. In question, the fall of the ruble, to the lowest since March 2022, just following the Russian invasion of Ukraine. The ruble was trading on Monday at more than 100 for 1 dollar and 110 for 1 euro.
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After inflation, it is a rise in prices that awaits the Russians. Vladimir Bessosedniy, a retired teacher, is sorry:
“Prices will go up, which means that the standard of living will go down. It has already gone down, it will go down once more. There are more and more poor people, that’s for sure.”
Alexandra Prokopenko, researcher at the Carnegie Russia Eurasia Center and former official of the Russian Central Bank explains that “the most fundamental factor is the structural change in the Russian economy. Demand is now fueled by the growing needs of the military-industrial complex, if not more. I’m not just talking regarding companies that work for the war, but also a very large part of the civilian sector.”
Hydrocarbon sales down
One of the main causes of the fall of the currency is the state of foreign trade. Russia is suffering in particular from the considerable fall in income linked to the sale of its hydrocarbons, under the effect of the sanctions and the determination of the Europeans to get out of their energy dependence vis-à-vis Moscow. The weakening of the rouble, however, allows the Russian state to replenish its coffers, because for each dollar or euro currently acquired, the government has de facto more rubles to cover its expenses, which have risen sharply due to the conflict in Ukraine.
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