October 3, 2023

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Russia’s central bank can’t stop the ruble from falling and worries are growing in Moscow

Russia’s central bank can’t stop the ruble from falling and worries are growing in Moscow
FILE PHOTO: Illustration of US one dollar and Russian 100 ruble bills (Reuters)

He Russia’s central bank cannot stop the ruble’s decline According to an article published in the newspaper, it took desperate measures this Tuesday The Wall Street Journal. The ruble has fallen in recent months, losing more than half its value against the dollar.. This is due to many factors including Western sanctions on Russia for his invasion UkraineFalling oil prices and rising inflation.

The financial institution raised interest rates on Tuesday from 8.5% to 12% in an attempt to stem the currency’s slide. A day ago, One dollar is worth 102 rublesThis forced those responsible for monetary policy to call an emergency meeting, the newspaper said NY.

Western sanctions on Russia have been particularly devastating. For the Russian economy. There are obstacles Russia’s frozen foreign exchange reserves It has also made it difficult for the regime to negotiate with the outside world. This is A Scarcity of goods and services in the countryand caused the cost of living among the population to rise alarmingly.

The Falling oil prices This has also had a negative impact on the Russian economy. led nation Vladimir Putin A major producer of crude oil, and revenue of a large portion of the revenue The KremlinIt also helps fund his bloodlust Invasion of Ukraine. Falling oil prices have reduced the Russian government’s revenues, making it more difficult Putin Resolve your battle.

FILE PHOTO: Governor of the Central Bank of Russia Elvira Nabiullina attends a session of the St. Petersburg International Economic Forum (SPIEF) in St. Petersburg, Russia, June 16, 2022 (Reuters)

He Rising inflation It also has a negative impact on the country’s economy. Inflation drove up the prices of goods and services, reducing Russians’ purchasing power. This has reduced consumption and weakened the economy.

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He Central Bank of Russia It has taken several measures to prevent the fall of the ruble, including Increase in interest rates and sale of foreign exchange reserves. However, these measures They are not very successful.

Rising interest rates have made borrowing more expensive Russia. This slowed the Russian economy, but helped reduce inflation. However, rising interest rates have made it difficult for Russian companies to invest and grow.

By selling foreign exchange reserves Central Bank of Russia This helped stabilize the ruble, but it depleted the country’s reserves. This money is important because it is used to finance imports and stabilize the ruble.

The ruble is unlikely to recover anytime soon. Western barriers Russia They are far away and oil prices are low. This means that Russia’s central bank will have to take steps to prevent the ruble from falling further. However, these measures are difficult to be very successful. A falling ruble is a sign that the Russian economy is in trouble.

Here are some additional effects of the ruble collapse:

  • Rising cost of living for Russians.
  • The purchasing power of Russians decreased.
  • Consumption decreased.
  • The weakness of the Russian economy.
  • Increased risk of social instability.

This situation – step Wall Street Journal– And some investors will buy Russian financial assets even if they offer higher yields. A sharp increase in interest rates as the first sign of trouble could be the president’s signature strategy Central Bank, Elvira NabiullinaMany developing countries have recently copied, but this time it may have only a modest impact.

Pedestrians walk past the central bank headquarters in Moscow, Russia as the ruble continues to fall (Reuters)

The ruble will continue to depreciate in the future, reflecting the deterioration of productivity. Russia. Western sanctions, which have restricted the import of foreign technology, have had a negative impact on the Russian economy. Many Western companies have also left the country, further reducing economic activity.

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