The recent depreciation of the ruble against the US dollar does not pose a threat to Russia’s financial stability, according to a senior official from the Russian Central Bank. Ksenia Yudaeva, the First Deputy Chairman of the Central Bank, attributed the ruble’s decline to changes in the balance of trade. The balance of trade refers to the difference between the monetary value of a country’s imports and exports.
On Tuesday, the ruble slid beyond 90 against the US dollar, a level not seen since March 2022. However, it later gained some ground, trading at 90.04 against the dollar at 14:33 Moscow time, according to data from the Moscow Stock Exchange. The euro also weakened against the ruble, trading at over 98 rubles, the weakest level since March 2022.
Yudaeva emphasized that there was no need for the Central Bank to reintroduce the mandatory sale of a portion of forex earnings by exporters, a measure that was temporarily implemented last year in response to Western sanctions linked to the Ukraine conflict. This indicates that the Central Bank remains confident in the ruble’s resilience despite recent volatility.
The Deputy Chairman of the Central Bank, Aleksey Zabotkin, stated last week that the ruble’s depreciation has been influenced by the declining prices of Russian exports. Lower oil prices and Western sanctions have also exerted pressure on the ruble in recent weeks. Sanctions have restricted foreign investment and limited the currency supply from exporters, exacerbating the ruble’s depreciation.
In addition to these factors, the ruble has faced additional challenges in its recent decline. The currency has been negatively impacted by the activities of the Wagner private military company, led by Evgeny Prigozhin. The group launched an insurrection against Russia’s military leadership on June 23-24, briefly seizing a military headquarters in Rostov-on-Don and advancing towards Moscow. However, after failing to garner support from the regular Russian army, Wagner halted its advance and reached an agreement with the authorities.
Despite these developments, the Central Bank remains confident in Russia’s financial stability. While the ruble has weakened, there is no immediate cause for alarm. The recent decline can be attributed to various factors, including changes in the balance of trade, declining export prices, lower oil prices, Western sanctions, and the activities of the Wagner private military company. The Central Bank’s decision not to reintroduce the mandatory sale of forex earnings indicates its belief that the ruble will regain its strength in due course.
It remains to be seen how these factors will continue to impact the ruble in the coming months. However, it is clear that the Central Bank is closely monitoring the situation and will take appropriate measures if necessary to ensure the stability of the Russian currency.