RUSSIAN ROUBLE DROPS PAST 101 AGAINST THE DOLLAR

Mon 14 August 2023:

The Russian rouble slid past 101 against the dollar, its lowest level since March 23, 2022, weeks after Moscow invaded Ukraine.

Since the beginning of the year, the rouble has shed about 30 percent of its value against the dollar as imports rise and exports decrease.

The rouble , which has lost around a quarter of its value against the dollar since Putin sent troops into Ukraine in February 2022, hit 101.04 per U.S. dollar, its weakest point in almost 17 months.

On Monday morning, data from the Moscow Exchange showed the rouble trading at 101.01 to the dollar, while against the euro, it fell to a near 17-month low of 110.73.

Russian President Vladimir Putin’s economic adviser Maxim Oreshkin said in an op-ed for the TASS news agency that the Kremlin wanted a strong rouble and expected a normalisation shortly.

“The main source of rouble weakening and accelerating inflation is soft monetary policy,” Oreshkin wrote.

“A weak rouble complicates the economy’s structural transformation and negatively affects the population’s real incomes,” he said.

The Bank of Russia, which hiked rates by 100 basis points in July to 8.5%, has blamed the rouble’s sharp slide this year on Russia’s shrinking current account surplus – down 85% year-on-year in January-July.

On Monday, the bank said it saw no financial stability risks from the rouble’s weakening and gave another hawkish signal that a rate hike is possible soon.

To staunch the rouble’s slide, Russia could reintroduce tougher capital controls. Another option would be to raise interest rates, something the central bank is already minded to do given high inflation, but that limits economic growth potential and means higher borrowing rates for the government as it seeks to finance military operations in Ukraine.

SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES

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