The Russian currency, the ruble, fell to 113 rubles per dollar, Wednesday, November 27, 2024; and this, in a context of growing geopolitical instability.
The Russian ruble continued to lose ground, reaching 113 rubles to the dollar on Wednesday. This is what emerges from data from the Moscow Stock Exchange (MOEX). This sharp drop comes against a backdrop of Western sanctions and growing geopolitical uncertainty, analysts say.
Thus, the ruble traded on Wednesday at its lowest level since March 2022. The Russian currency fell to 119 per euro.
The fall of the ruble has been aggravated by the latest Western sanctions, analysts told the economic daily RBK.
Indeed, last week, the United States imposed a new series of sanctions on several companies in the Russian financial sector. The measures targeted Gazprombank, Russia’s third-largest bank, which plays a key role in processing payments for export operations.
“Much depends on how quickly Russia manages to create alternative channels of entry and exit of foreign currencies, capable of meeting supply and demand,” Aleksandr Shepelev, stock market expert at BCS World of Investments, told the news site Gazeta.Ru.
This would allow a gradual easing of pressure on the Russian currency, the analyst noted. “And as long as there is a serious imbalance in the market and the financial authorities are in no hurry to intervene in the situation, the pressure on the ruble will remain,” he added.
In addition, the ruble is under pressure from the seasonal increase in import demand, the sharp increase in fiscal spending typical of the end of the year, growing geopolitical pressure and the rise of the US dollar on the global market, explains Mr. Shepelev.
Analysts have suggested that Russia’s central bank and financial authorities could intervene to support the currency.
Commenting on the weakening of the ruble, Russian Finance Minister Anton Siluanov said that this was beneficial for exporting companies in the current geopolitical situation. “I’m not saying whether the exchange rate is good or bad,” stressed Mr. Siluanov. While noting that a weak exchange rate boosts exports and helps the government increase ruble-denominated budget revenues.
**What are the broader economic consequences of a weakening ruble beyond increased imported goods prices for Russian consumers?** (This question encourages the user to think critically about the impact on different sectors of the Russian economy and potentially on its international standing.)
## Ruble Tumbles: Is This a Sign of Deeper Troubles?
**World Today News** spoke with Dr. Irina Makarova, Professor of Economics at the Moscow Institute of Finance, to understand the factors driving the ruble’s recent plunge and what it signifies for the Russian economy.
**WTN**: Dr. Makarova, the ruble has been steadily weakening in recent weeks, hitting a new low today. What are the primary drivers behind this drop?
**Dr. Makarova**: The recent fall of the ruble is indeed worrying and complex. While the immediate trigger seems to be the latest round of US sanctions targeting Gazprombank, there are deeper, underlying factors at play.
**WTN**: Can you elaborate on these underlying factors?
**Dr. Makarova**:
Firstly, the ongoing war in Ukraine continues to weigh heavily on the Russian economy. The conflict has disrupted supply chains, spooked investors, and led to a significant outflow of capital.
Secondly, Western sanctions, while impacting specific sectors, have created a climate of uncertainty, hampering investment and hindering economic growth.
Thirdly, Russia’s dependence on energy exports means that fluctuations in global energy prices directly impact the ruble’s value. With energy prices stabilizing, the ruble loses some of its previous support.
we are seeing signs of a weakening Russian economy. Consumer confidence is low, inflation remains stubborn, and key industries are struggling.
**WTN**: What are the potential consequences of a weaker ruble for ordinary Russians?
**Dr. Makarova**: A weak ruble means imported goods become more expensive, leading to higher prices for consumers. This can exacerbate the inflation problem, eroding purchasing power and reducing living standards.
**WTN**: You mentioned alternative channels for foreign currency access. Can Russia successfully navigate around these sanctions and strengthen the ruble?
**Dr. Makarova**:
Russia is indeed actively seeking alternative payment systems and partnerships with countries outside the Western sphere of influence. However, it’s a complex and challenging process. Building new financial infrastructure and establishing trust with new partners takes time.
Furthermore, the effectiveness of these measures hinges on the global response.
If countries choose to uphold sanctions, it will be difficult for Russia to fully circumvent their impact.
**WTN**: What is your outlook for the ruble in the coming months?
**Dr. Makarova**:
Predicting the future is always difficult, especially within such a volatile geopolitical situation. Much depends on the trajectory of the war, the response of the international community to Russia’s policies, and the effectiveness of Russia’s own economic measures.
We are likely to see continued volatility in the ruble’s exchange rate. A sustained recovery requires a combination of factors: a de-escalation of geopolitical tensions, successful diversification of the Russian economy, and a clear roadmap towards long-term growth.
**WTN**:
Thank you for your insights, Dr. Makarova.
