Russia’s ruble has plummeted against other currencies, causing concerns for the Kremlin’s efforts to manage inflation. The central bank set a record-low exchange rate of 109 US dollars on Friday, making the ruble nearly worthless in dollar terms.
The decline is largely attributed to the price of oil and gas, which Russia’s economy relies heavily on, as well as sanctions imposed by Western allies on Russian banks. However, the Kremlin argues that the situation remains under control, with President Vladimir Putin stating that there are “no grounds for panic.”
Experts, however, warn that a weaker ruble will lead to higher prices for imports and potentially slow down the economy. The decline in the ruble also reflects Russia’s increased dependence on foreign trade partners, particularly China.
While the sanctions have hurt Russian banks, they may also boost oil and gas export earnings in ruble terms. The central bank is managing the rate, but faces a delicate balance between inflation and budget concerns.
“It’s a tricky juggle,” said Chris Weafer, CEO of Macro-Advisory Ltd. “They need to come up with the optimal rate that takes into account all factors, including exports and demand for FX.”
Source: https://apnews.com/article/russia-ruble-economy-putin-oil-bbaf01658af449b9848e347785704b19