Russia’s currency has reached its lowest point since March 2022 due to ongoing economic turbulence, with the ruble weakening to 114 against the US dollar. The Central Bank (CBR) has intervened to stabilize the market, halting foreign purchases on the domestic currency and raising interest rates to combat inflation.
The weakening ruble has raised concerns about the financial sustainability of Russia’s aggression in Ukraine, particularly as new US sanctions target Gazprombank, a major conduit for Russian gas payments. Losing this channel could further strain Russia’s ability to finance its war efforts, leading to potential degradation in public services and social unrest.
Experts warn that while the military industrial complex may not be directly affected by the currency fluctuations, inflation will rise, affecting real incomes and private consumption. The targeting of Gazprombank means Russian gas and oil purchasers must find alternative payment methods, which could take time.
High inflation has reached 8.5%, more than twice the Central Bank’s target, with a worker shortage stoking prices for staple goods like butter and potatoes. This has added to public disquiet over soaring costs, potentially posing a problem for Putin as the war continues.
Analysts predict that the weakening ruble could lead to social and political pressures building against Putin, adding complexities to his decision-making process. The situation highlights the increasing constraints on Putin’s policies due to economic and military pressures.
Source: https://www.newsweek.com/russia-ruble-ukraine-war-1993091