The Russian ruble experienced a significant drop of nearly 2% against the US dollar on the Moscow Exchange during trading on Friday. This decline led to the currency reaching its lowest point since late March 2022. Exchange data revealed that the ruble was trading at 89.4 rubles to the dollar at 14:00 Moscow time, while the euro was being traded at over 97 rubles, which is also the lowest level observed since March 2022.
To address concerns over financial stability, Central Bank Deputy Chairman Alexey Zabotkin reassured investors on Friday that the weakening ruble does not pose any risks. Zabotkin attributed the depreciation of the ruble to the declining prices of Russian exports. He explained, “We note that in recent months, the prices for the goods that make up a significant portion of Russia’s exports have been decreasing. Additionally, global prices have also been falling, even without considering the discounts applied to Russian exports. The exchange rate is simply a reflection of the deteriorating external situation.”
The decline of the Russian ruble throughout the week can be attributed to the brief rebellion by the Wagner private military company. Led by Evgeny Prigozhin, the group initiated an insurrection against Russia’s military leadership over the weekend. Armed units even seized a military headquarters in Rostov-on-Don, with some forces marching towards Moscow. However, since they failed to garner support from the regular Russian army, Wagner ultimately decided to abandon their advance on the capital and reached an agreement with the authorities.
Aside from the Wagner incident, the ruble has also been under pressure in recent weeks due to lower oil prices and Western sanctions. These sanctions limit foreign investments and restrict the currency supply from exporters, further impacting the depreciation of the ruble.
In light of these developments, it is crucial to monitor the economic and financial landscape in Russia. The country’s currency has experienced significant fluctuations, and various factors are contributing to its ongoing decline. Observers will be keen to see how the Russian government responds to these challenges and whether further measures will be implemented to stabilize the ruble.
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