Russia’s currency hits the lowest level since beginning of the war in Ukraine

The value of the Russian ruble has plunged to its lowest mark since the initial stages of the Ukraine conflict, a slide caused in part by Western sanctions that have impacted energy exports and lessened demand for the national currency.

On Monday, the exchange rate of the Russian ruble went beyond 101 rubles to the dollar. This is a continuation of a trend that has seen the currency depreciate by over a quarter since the start of the year, reaching its most diminished value in nearly one and a half years.

Maksim Oreshkin, an economic adviser to President Vladimir Putin, criticized the weakened ruble on Monday, attributing it to “an unrestrictive monetary policy” in a column for the state-run news agency Tass. He argued that a robust ruble is beneficial for the Russian economy, whereas a feeble currency “hampers economic adaptation and has an adverse effect on the real incomes of citizens.”

Oreshkin expressed confidence that Russia’s central bank possesses the necessary means to rectify the situation and anticipated a return to normalcy soon.

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During a media briefing on Friday, Alexei Zabotkin, the central bank’s deputy director, stated that the bank is maintaining a floating exchange rate, as “it lets the economy efficiently adapt to varying external situations.”

A few days prior, the central bank announced a halt to purchasing foreign currency in the domestic market for the remainder of the year to support the ruble and mitigate fluctuations. Typically, Russia utilizes foreign currency sales to compensate for revenue deficiencies from oil and gas exports, and acquires currency when there is an excess.

At the beginning of the year, the ruble was valued at approximately 66 to the dollar but lost roughly one-third of its value in the following months.

Following the Western sanctions imposed due to the invasion of Ukraine in February 2022, the ruble fell to as low as 130 to the dollar. However, measures like capital controls by the central bank stabilized it, and by the previous summer, it traded in the 50-60 range to the dollar.

Zabotkin, speaking on Friday, acknowledged that international sanctions had reduced imports to Russia, causing the ruble’s decline, but he rejected notions that capital flight was also a contributing factor, labeling the claim as “unfounded.”

Last month, the central bank implemented a significant 1% hike in its primary interest rate, citing anticipated inflation and the depreciating ruble as risks. Zabotkin hinted that the rate, currently at 8.5%, might be increased again at the upcoming meeting on September 15.

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• Central Bank of Russia
• Tass (Russian news agency)
• Latest news on Western sanctions against Russia
• Recent reports on Russia’s economy and currency exchange rate
• Analysis of Russia’s monetary policy and interest rates