Russian Rouble Downward Spiral: In the complicated web of global finance, the Russian rouble, a sign of economic tenacity, gave in to persistent demands and crossed the symbolic level of 100 against the dollar. Even so, it made a weak comeback early on Tuesday. This was a short break from the problems caused by the flight of foreign exchange and the shrinking current account balance.
The struggling rouble was weak against the dollar by 0.21% at 04:15 GMT when it was worth 99.97. At 4:00 GMT, the day got off to a bad start with a low of 100.26. This was the start of this financial story.
During the currency dance that was going on at the same time as the euro, the rouble showed resilience by going up by 0.33 per cent to 104.61. But it had trouble getting along with the yuan. Its value went down by 0.28%, ending at 13.65.
Every month at the beginning, the support of an excellent month-end tax shelter goes away, showing the cyclical weakness of the Russian currency. This story is told over and over again because exporters regularly convert foreign exchange earnings to meet domestic responsibilities.
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When the rouble fell to 101.75 per dollar in August, President Vladimir Putin’s economic adviser criticized the central bank, creating discordant notes in the financial music. The blame was put on the bank’s supposedly lax processes, which echoed discontent.
After the storm in August, which caused the emergency rate to jump to 12%, another event in September caused another jump, this time to a peak of 13%. Analysts are looking at the financial future as a whole, and they think that the restrictions on money will be tightened at the meeting on October 27. Inflationary pressures make this dance with money even more challenging.
Since the attack on Ukraine in February 2022, it has been a rough ride for the rouble. In March last year, the exchange rate hit a terrible low of 120 to the dollar. This was the start of a steady climb to a seven-year high. During this erratic rise, a lack of cash and much money from exports were helpful.
But the tides have changed. Trade flows are no longer steady, and Western bans are hurting exports. The storm that broke down the rouble this year was the rise in imports, which happened while exports were falling. In the history of January to August, the current account balance, which had been a strong support for a long time, shrunk by a shocking 86% year over year, going from a considerable amount to a small amount of $25.6 billion.
Our Reader’s Queries
Why is Russian ruble dropping?
The Ruble’s decline can be attributed to Russia’s reduced exports, particularly in oil and natural gas, resulting in decreased revenue. Additionally, the country’s increased imports have led to more rubles being exchanged for foreign currencies such as dollars or euros. This trend is primarily driven by individuals and businesses importing goods into Russia.
What is the outlook for the Russian ruble?
According to a recent Reuters poll, the rouble’s recent strengthening is expected to plateau soon, with the Russian currency projected to gradually decline back below 100 to the dollar by 2024. This trend is anticipated to contribute to the continuation of higher interest rates in the double digits for a longer period of time.
What is the ruble forecast for 2024?
The Russian Ruble’s price prediction for 2024 is expected to fall between $0.009832 and $0.016900. If it reaches the higher end of this range, the RUB could see a significant increase of 52.07% and reach $0.016900.
Why is the Russian ruble undervalued?
The value of the Russian ruble has hit a new low, not seen since the early stages of the Ukraine conflict. This is due to the impact of Western sanctions on energy exports, which has weakened demand for the national currency.