The Russian ruble experienced a continued decline this week, with a drop of over 2% against the euro on the Moscow exchange on Friday. The currency reached a trading rate of 106 rubles to the euro, a level not seen since March 2022. Additionally, the ruble also declined to 96 against the US dollar. Analysts have attributed this decline to both the end of the tax period and the disbalance between demand and supply.
Experts quoted by Interfax stated that while the ruble continues to weaken, there is still potential for it to strengthen due to improvements in the oil market. They believe that the ruble’s depreciation is temporary and that favorable conditions in the oil market could lead to a recovery in the currency’s value.
The Russian central bank, while acknowledging the ruble’s depreciation, has assured the public that it poses no threat to the country’s financial stability. The central bank has identified changes in the balance of trade as the main cause of the ruble’s decline. This suggests that the demand for imports in Russia has exceeded the demand for exports, leading to a higher supply and lower value of the ruble.
It is important to note that the ruble’s value is influenced by various factors, including global economic conditions, international trade dynamics, and domestic economic policies. The depreciation of the ruble can have both positive and negative effects on the Russian economy. On one hand, it can make Russian exports more competitive in the international market, boosting the country’s export revenues. On the other hand, it can lead to higher inflation and increased costs for imported goods.
As the ruble continues to weaken, it is crucial for the Russian government and central bank to closely monitor the situation and take appropriate measures to stabilize the currency. This may involve interventions in the foreign exchange market, implementing monetary policies to control inflation, or promoting domestic economic growth to stimulate demand for the ruble.
Overall, the decline of the Russian ruble against major currencies like the euro and the US dollar is a result of the demand-supply disbalance and the end of the tax period. While this depreciation may have short-term implications for the Russian economy, there are expectations for the ruble to strengthen in the future, especially if favorable conditions in the oil market persist. It remains important for policymakers to carefully manage the situation and ensure the stability of the currency to support the overall economic growth of the country.