The Russian currency, the ruble, has experienced a significant decline, reaching a three-week low, according to the country’s Finance Ministry. This weakening of the ruble can be attributed mainly to fluctuations in the trade balance, as stated by Russian Finance Minister Anton Siluanov in an interview with TASS news agency.
In recent trading, the ruble was down 1.16% against the US dollar, hitting its weakest level in three weeks at 92.77 rubles per dollar. In the previous week, the ruble was relatively stable, trading within a narrow band near 90 against the dollar.
Minister Siluanov highlighted that the primary reason for the ruble’s depreciation is the trade balance, which involves the inflow and outflow of currency into and out of the country. He noted that the demand for foreign currency tends to be higher during the summer holiday season. Siluanov also mentioned that some analysts attribute the ruble’s decline to the sale of foreign businesses in Russia, resulting in an outflow of foreign currency. However, he emphasized that the Finance Ministry and the Central Bank had previously agreed on a limit of $1 billion per month for the volume of currency withdrawal from such business sales. Therefore, the impact of these sales on the currency market is not considered critical.
Furthermore, Siluanov explained that export prices for energy were high in 2022, while imports had decreased. However, imports have now recovered, and the prices for exported goods, particularly gas, are below last year’s levels. He stated that the current export prices are sometimes five times lower than those recorded in 2022.
Elvira Nabiullina, the head of the Bank of Russia, also recently noted that the ruble’s exchange rate drop in June and July was mainly due to reduced exports and increased imports.
In summary, the recent decline in the Russian ruble can be attributed to changes in the country’s trade balance, with higher demand for foreign currency during the summer holiday season and a recovery in imports. Although the sale of foreign businesses in Russia and the outflow of foreign currency have been mentioned as possible contributing factors, the agreed limit on currency withdrawal from these sales suggests that their impact on the currency market is minimal. The high export prices for energy seen in 2022 have also declined, further affecting the ruble’s exchange rate.
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