Russia’s ruble is now worth less than 1 cent, its lowest value since Western nations imposed crippling sanctions on the country in response to its invasion of Ukraine.
On Monday, the Russian currency passed 101 rubles to the dollar, part of a slide that began in January and which has erased about one-third of the ruble’s value since then. The plunge also marks a reversal from the currency’s performance in 2022, when at one point it was the strongest performer in the world.
In a Monday op-ed for state news agency Tass, Maksim Oreshkin, President Vladimir Putin’s economic adviser, blamed “loose monetary policy” for the weak ruble. He added that the central bank has “all the tools necessary” to stabilize the currency.
“A weak ruble complicates the economy’s structural transformation and negatively influences real household earnings,” Oreshkin said. “A strong ruble is in the interests of the Russian economy.”
Earlier this month, the central bank said it would stop buying foreign currency on the domestic market until the end of the year to try to prop up the ruble and reduce volatility. Russia typically sells foreign currency to counter any shortfall in revenue from oil and natural gas exports and buys currency if it has a surplus.
But suspending foreign-exchange purchases “has failed to stabilize the currency,” JPMorgan Chase & Co. analysts wrote, according to Bloomberg News.
“Matter of honor”
The slide comes as Russia continues to face international sanctions as well as its ongoing military conflict. The nation has used aggressive measures to keep money from leaving the country, while also benefitting from fossil-fuel sales to prop up its economy.
But a weaker ruble could increase the cost of imports, while also boosting inflation — with central bank deputy director Alexei Zabotkin on Friday saying that he expects inflation to continue to rise. He indicated that the central bank’s key interest rate — now at 8.5% — could be raised again next month.
Its central bank has forecast inflation will hit as high as 6.5% by year-end, according to Reuters.
The strength of the ruble against Western currencies has long been an important yardstick for Russians to measure their country’s standing in the world, Princeton University’s Ekaterina Pravilova told the Wall Street Journal.
“It was a matter of obsession,” she told the publication. “It was a barometer not just of Russian well-being but also of how European Russia is. It was prestige, it was a matter of honor.”
—With reporting by the Associated Press.