Since the beginning of August, on the Moscow Exchange, the dollar has increased in price by six rubles, and the euro – by five. It will be more throughout July.
The Russian ruble continues to decline and is now one of the three weakest currencies in the world in 2023, along with the Turkish lira and the Argentine peso. A year ago, the ruble exchange rate was 60 rubles per dollar, and now it is close to 100 rubles per dollar. Russian authorities have yet to strengthen the ruble. What’s next for him?
Reasons for the collapse
The ruble is under pressure from sanctions and capital outflows from the country. It seems like a natural process when you unleash an unjust war in the middle of Europe. It is significant that the fall of the ruble intensified against the backdrop of Yevgeny Prigozhin’s march on Moscow.
Exporters also contribute to the weakening of the ruble. Last year, the authorities managed to strengthen the ruble, among other things, due to the fact that companies were obliged to sell 80% of foreign exchange earnings, thereby creating a stock offer exchange. But since then, payments in dollars and euros have become unsafe due to the threat of blocking, so businesses have actively switched to settlements in rubles, including foreigners. As a result of these transactions, companies do not receive money that they can sell and thus strengthen the ruble. In real terms, the volume of sales of foreign exchange earnings more than halved: from $16.8 billion in July 2022 to $6.9 billion in July 2023.
Will it get worse?
The collapse of the ruble could accelerate inflation. However, there is no significant inflationary pressure in Russia at the moment, according to experts.
“And if there is acceleration, it’s a long-term story. Moreover, the ruble started the war at the level of 80 rubles per dollar, so the devaluation was less noticeable for a year and a half,” said financial analyst Sergei Fursa.
The head of the Russian Central Bank, Elvira Nabiullina, admitted that the devaluation of the ruble affects inflation expectations and will eventually affect prices, so the key rate may be raised again in the Russian Federation. If this happens, bank deposits will become more attractive to the population, which now holds money in foreign currency. The Central Bank made a similar decision last time, on July 21, but it did not stop the devaluation: the ruble has since depreciated against the dollar by 7%. And since the beginning of the year, the Russian currency has lost 25% of its value.
Most experts believe that the dollar exchange rate at 100 rubles in August is quite real. And it is also quite realistic to return to Soviet practices, with certain ruble exchange rates – official and actual.
Source: korrespondent
I am David Wyatt, a professional writer and journalist for Buna Times. I specialize in the world section of news coverage, where I bring to light stories and issues that affect us globally. As a graduate of Journalism, I have always had the passion to spread knowledge through writing.