The Russian ruble experienced a significant drop of over 3% against the euro on the Moscow Exchange during Thursday’s trading session, causing it to fall below the landmark rate of 100 to the single currency. According to exchange data, the ruble reached more than 102 to the euro in the morning trade, marking a decline of 3 rubles compared to the previous day’s closing rate. Additionally, the Russian currency has also weakened against the dollar, trading at nearly 94 rubles to the greenback. These rates against both the euro and the dollar are currently the lowest they have been since March 2022.
Addressing concerns about the currency depreciation, Bank of Russia Governor Elvira Nabiullina stated that the central bank is prepared to intervene in the currency market if there are risks to national financial stability, although there are no such dangers at present. She explained that the ruble’s depreciation is primarily the result of shifts in the ratio between Russia’s imports and exports. Nabiullina further dismissed conspiracy theories suggesting that the weakening of the ruble is a deliberate attempt to boost budget revenues, emphasizing that the dynamics of foreign trade largely dictate the exchange rate.
Nabiullina also highlighted the benefits of having a floating exchange rate for the economy as it allows for better adaptation to external shocks. She assured that the central bank has measures in place to minimize short-term fluctuations of the ruble. However, recent events have put significant pressure on the Russian currency. One of these events was the short-lived rebellion by the Wagner private military company, led by Evgeny Prigozhin, against Russia’s military leadership on June 23-24. This rebellion had a notable impact on the ruble’s value.
In addition, the ruble has been facing challenges in recent weeks due to lower oil prices and Western sanctions. The sanctions have limited foreign investment and restricted the supply of currency from exporters, contributing to the ruble’s decline.
The current situation with the ruble serves as a reminder of the vulnerability of currencies to various external factors. It highlights the importance of maintaining a balanced and stable economy to withstand potential shocks. The Russian government and central bank will continue to closely monitor the situation and take necessary measures to support the currency and ensure financial stability.
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