The Russian ruble has continued its downward trend against major global currencies, reaching its lowest level in over 16 months on Monday. At 7:29am GMT, the ruble was trading at over 96 against the US dollar, marking its weakest performance since March 28, 2022. While it did experience a modest gain against the euro, reaching over 106 on Friday, it remains significantly weakened overall.
Experts attribute the ruble’s decline to multiple factors, including an increase in local demand for foreign currency, which may be linked to the summer holiday season. Additionally, the support from exporters typically decreases at the beginning of the month, exacerbating the ruble’s weakness.
Another contributing factor is the recent decision by the Finance Ministry to shift from selling to buying foreign currency since August 7 under the budget rule. Egor Gilnikov, the chief analyst at Promsvyazbank, states that this change has further pressured the ruble. Moreover, the unexpected correction in the Moscow Exchange index has also had a significant impact, potentially leading to capital outflow from the country.
Russian Finance Minister Anton Siluanov addressed the weakening ruble last week, highlighting that changes in the country’s trade balance and strong demand for foreign currency during the holiday season were major factors behind the decline.
The drop in the ruble’s value has raised concerns and garnered attention from investors and analysts worldwide. The impact of a weakened currency extends beyond Russia, as it affects international trade and investment. Therefore, experts are closely monitoring the situation to assess the potential implications for both the Russian economy and the global financial market.
To mitigate the ruble’s decline and stabilize the currency, the Russian government may need to implement measures such as adjusting monetary policy, increasing foreign currency reserves, or implementing fiscal reforms. However, the effectiveness of such measures depends on various economic and geopolitical factors, making it a complex decision for policymakers.
In conclusion, the Russian ruble’s recent slide against major currencies has reached a 16-month low, primarily due to increased local demand for foreign currency, a decrease in support from exporters, changes in the trade balance, and the Finance Ministry’s decision to switch from selling to buying foreign currency. The impact of these factors has put pressure on the ruble and raises concerns for both the Russian economy and the global financial market.
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