2023-08-14 10:16:38
The Russian ruble continues to fall in value and is now at its lowest point in 16 months. Only in the first weeks after the invasion, at the end of February last year, was it worth less than it is now. For 1 euro you have to put more than 110 rubles on the table today.
This year alone, the Russian currency has lost a quarter of its value. The decline has accelerated in recent weeks, increasing economic pressure on Moscow.
The cause of this bad situation can be found in Western sanctions that restricted the inflow of capital, the increase in military spending and the stagnation of exports.
defence
The domestic economy was boosted by government spending on defense, but that also pushed up the budget deficit and pushed the currency further down. The sharp interest rate cut by the Russian Central Bank last year added fuel to the fire.
Due to the large expenditures, imports rose by 20 percent in the first half of the year. “Very little money is coming into the country,” former Russian deputy energy minister Vladimir Milov told the Financial Times. “Imports have now returned to pre-war levels, but we now import all our consumer goods from China, Turkey, Central Asia and the Emirates and no longer from the West. You still have to pay for it in a certain currency, but nobody wants rubles.”
Consumer prices
Meanwhile, dissatisfied voices are heard in Russia itself about the situation. The well-known presenter Vladimir Solovyov criticized the course of events. “What is happening in this country!? How did this exchange rate come about? Ultimately, this will lead to an increase in consumer prices,” he warns.
Presenter Vladimir Solovyov. © RT
At the moment, the Russians are not feeling much of the depreciation of the ruble because the economy has completely folded back on itself, but that could indeed change in the future. Russia could follow the same path as Turkey, where sky-high inflation drove up prices in stores.
Just after the invasion of Ukraine, the ruble fell to an even lower point against the euro and the dollar, but the huge rise in oil and gas prices quickly made up for that. However, Europe has since turned away from Russian energy.
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