2023-08-15 06:15:08
24 minutes ago
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The Russian currency, the ruble, fell to a fresh 16-month low against the dollar, falling below the 100-ruble mark.
After a major market drop on Monday (August 14), the market expects that the Russian central bank will raise interest rates in response. The ruble rose slightly against the dollar to 96.4 rubles to the dollar in early trading in Eastern Europe on Tuesday (15th).
The main reasons for the depreciation of the ruble include the increasing pressure on Russia’s economic growth, the growth rate of imports is much higher than that of exports, and the increase in military expenditures for Ukrainian station masters.
Since launching its war of aggression against Ukraine in February 2022, Russia has been under sanctions from Western countries. The ruble plummeted when the war broke out, spending, but then recovered due to capital controls and oil and gas exports.
The ruble has fluctuated in value since the start of the war, but has since lost about a quarter of its value against the dollar.
Earlier on Monday, the ruble hit 101.04:1 against the dollar.
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Russia’s central bank said it may raise interest rates, but insisted that the country’s financial stability is not under any threat.
After Russia invaded Ukraine, the central bank briefly raised interest rates from 9.5 percent to 20 percent, but began cutting them soon after.
The current interest rate of the Russian central bank is 8.5%, and the central bank is preparing to discuss the possibility of raising interest rates on Tuesday.
Jane Foley of Rabobank said the ruble had “gradually weakened” this year, “a trend that started in July last year”.
“The weaker ruble reflects Russia’s weakening (economic) fundamentals,” she said, with Russia running a budget deficit and imports and exports from China and Turkey coming under pressure.
Russ Mould, director of investment research at AJ Bell, said Russia’s trade and overall economy were being hit by Western sanctions, “especially oil and gas”.
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On February 24, 2022, Russian President Vladimir Putin announced a “special military operation” in Ukraine. What changes has the war brought to the world?
Many EU countries that originally relied on Russian oil and natural gas declared that they would stop importing from Russia when the Ukraine war broke out and look for alternative suppliers.
In December 2022, G7 and EU leaders agreed to set a price cap to limit profits from Russian oil exports. This also led to a decline in Russian exports.
Russia shut down gas pipelines to Europe, sparking fears of power shortages. In January this year, Germany, once the largest importer of Russian natural gas, announced that it would no longer supply fossil fuels from Russia.
“Exports are down, so foreign exchange inflows are down, imports are up, and even China is struggling to hold the ruble,” Molde said.
He believes Russia’s expulsion from international payment system Swift is also a blow to the country.
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