NewsRescue
The Russian ruble’s recent decline has placed it among the three worst performing emerging-market currencies, along with the Turkish lira and the Argentine peso, according to Bloomberg, citing trading data.
Since early June, when one dollar was worth roughly 80-81 rubles, the Russian currency has been losing ground against the US dollar. Earlier this week, the ruble fell to a fresh 16-month low of 98 rubles per dollar, its lowest level since late March 2022, the first month after Russia’s military action in Ukraine began. Overall, the ruble has lost nearly 24% of its value against the US dollar this year.
The Russian central bank indicated last week that the ruble’s weakness was attributable to a changing foreign trade balance and low quantities of foreign exchange revenue sales by exporters. While imports have increased, Western sanctions have resulted in a decrease in exports, which are a vital source of foreign currency for the government. As a result of Russia’s efforts to shift commerce with foreign partners to rubles and other national currencies, the inflow of dollars and euros into Russia began to decline.
Russian exporters’ proceeds from foreign currency earnings sales have also been significantly lower this year than in 2022. For example, in July, they totaled $6.9 billion, compared to $16.8 billion in the same month previous year.
Meanwhile, Bloomberg analyst Alexander Isakov argued that the ruble’s fall “comes down to capital outflow.” He pointed out that rising government spending is increasing demand for imports at a time when exports are dropping, and that individuals are increasingly shifting money to foreign banks as ruble interest rates have failed to match inflation expectations.
Isakov, on the other hand, projected that the ruble would gain support in the short run if the central bank raised the key rate to 9.5% and the government cut back on spending.
