The official exchange rate before the start of the invasion was around 80 rubles per dollar. After applying Western sanctions, it fell to 120 rubles. In terms of exchange rates, however, the situation is slowly returning to the pre-war state. Currently, the dollar can be bought for 84 rubles.
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According to economists, that Washington Post The Central Bank of the Russian Federation is partly behind the renewal of the banking system.
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She introduced strict limits concerning the exchange, withdrawal or transfer of hard currency overseas. But oil and gas exports, which bring hard currency to Russia, play a bigger role.
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“I think the key thing is that the Central Bank has managed to avoid a deep financial crisis for the present,” said Jelina Ribakovová from the Institute of International Finance.
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“We were afraid that the so-called runes on the bank could knock down some of the state-owned banks. But it doesn’t seem to have happened, “she added.
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| Runes on the bank |
| This is a situation where depositors lose confidence in the bank because they think it is or will soon become insolvent, and they start withdrawing their deposits en masse. The run can lead to the bankruptcy of the bank, because a bank with partial reserves can never pay out all the deposits. |
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However, according to experts, the Russian economy continues to feel “much pain”, which will be even more intense.
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Inflation in Russia is forecast to be as high as this year 20 percentwhile gross domestic product could fall by as much as 15 percent, which would essentially erase years of economic growth.
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Minus 15 years of economic growth in Russia in just a few weeks and counting. We expect a contraction of -15% in 2022, driven mostly by the sharp contraction in domestic demand.
with @BHilgenstockIIF pic.twitter.com/0aUPA6f4tA
– Elina Ribakova 🇺🇦 (@elinaribakova) March 20, 2022
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In addition, not only Western corporations, which (not all) ceased to operate in Russia after the war, but also thousands of young people are disappearing from the Russian market, causing a brain drain.
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Economist Janis Kluge of the German Institute for International and Security Affairs claims that the stabilization of the ruble, albeit artificially manipulated, helps Russia to create an apparent picture of control towards its people.
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“The psychological effect is very important because it matters what the population thinks about the health of the economy, and the ruble is one of the main indicators that the Russians know,” Kluge explained.
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According to economists, the official exchange rate of the ruble may not reflect its true value. The central bank, until September 9, banned Russians from exchanging rubles for dollars, thereby created a black marketwhere the ruble is traded at lower values than at the official exchange rate.
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The central bank is partially circumventing the sanctions
Important Western sanctions against Russia included the freezing of the foreign exchange reserves of the Central Bank of the Russian Federation.
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The move was to prevent Russia from using its reserves of dollars and euros to buy rubles, which would increase the value of the currency.
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However, according to the Washington Post, Russia managed to partially circumvent these sanctions. At the end of February, the central bank began requiring all exporting companies to exchange 80 percent of their hard currency income for rubles. This began to create demand for the Russian currency.
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In addition, continued oil and gas exports to Russia provide a steady supply of hard currency, which companies must then exchange.
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The decree signed by President Vladimir Putin can now be shuffled with the cards.
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From Friday, April 1, Russia will require all gas payments in rubles only, which some countries have already rejected. France and Germany, for example, called the request blackmail.
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In addition, the United States and the United Kingdom have stopped buying oil and gas from Russia.
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