The Russian currency sank again on Tuesday and It was exchanged at more than 100 rubles per dollardespite the central bank’s efforts to stop inflation and the fall of the national currency.
The ruble, low the impact of international sanctions due to the offensive in Ukrainehas been on the floor for months, which has a negative effect on the purchasing power of the population.
In the Moscow Stock Exchangeat 07:03 local (04:03 GMT), One dollar was worth 100.11 rubles and one euro was worth 104.65 rubles.
The Russian currency then rose slightly during the day, but was still above 99 rubles to one dollar and 104 to one euro.
This is the most significant drop in the currency since mid-August, when it exceeded 100 rubles per dollar, the first time this had happened since March 2022, shortly after the start of the offensive in Ukraine.
The Central Bank of Russia (BCR) raised its main rate from 8.5% to 12% in August, following criticism from a Kremlin advisor for its “soft monetary policy.”
In mid-September, the guideline rate rose again to reach 13%.
In the last year, few currencies have depreciated as much as the Russian ruble. Last September, a American dollar I bought a little more than 60 rubles.
The fall is both a symbolic blow to the ordinary russianswho equate a strong currency with a strong country, as the cause of the tensions in it Russian state. It has blown up the consensus that existed among Russian policymakers last year, when the central bank and the Treasury They worked side by side.
Now, with the increase in inflation and the slowdown of growth, the two institutions are turning against each other. At stake is the country’s ability to wage war effectively.
During the early phases of the conflict, Russian officials had a simple task: prevent the economy from collapsing. Immediately after the start of invasion, this meant preventing people from taking money out of the financial system, applying capital controls and doubling the official interest rate. He ruble reached 135 per dollar, before recovering. The economy plummeted and then got better. Thanks to the juicy income from the sale of Petroleum and gashe Treasury kept the show splurging on defending and welfare.
The strong exports of Petroleum and gas They also caused the ruble appreciationwhich reduced the prices of import and, in turn, the inflation. This allowed the central bank accommodate the fiscal expansioncutting the interest rates below where they were on the eve of the invasion. Throughout 2022, the consumer prices rose 14% and real GDP fell 2%, a weak result, but much better than analysts had predicted. Last week, Vladimir Putin He noted that “the recovery phase of the Russian economy is over.”
The new one stage of the economic war It poses difficult decisions for the authorities. With an eye on the presidential election of March, the Ministry of Finance wants to support the economy. The news service Bloomberg has reported that Russia plans to increase spending on defending from 3.9% to 6% of GDP. He Ministry of Finance He also wants to increase spending on social security. Putin wants the economy go from strength to strength. He recently boasted about the lowest unemployment rate in Russiacalling it “one of the most important indicators of the effectiveness of our entire economic policy” (conscription and emigration certainly helped).
Putin wants to square the circle and defend the ruble no new rate hikes. For this reason, he has asked his political leaders to find creative solutions. Two main ideas are being explored: managing the currency and boosting energy exports. Neither of them seems like it’s going to work.
(With information from AFP)