The Russian ruble drops to 100 per US dollar for first time since march 2022

On Monday, the Russian ruble experienced a decline, reaching a rate of 100 per US dollar, marking its lowest value in the past 17 months.

Throughout the year, the ruble has faced pressure due to Russia’s trade balance deteriorating. Export earnings have decreased, while imports have increased, leading to a year-to-date drop of approximately 28% from levels close to 70 rubles per dollar.

Since the Russian invasion of Ukraine, the ruble’s value has been quite volatile. It reached a record low of 120 against the US dollar in March 2022, only to rebound to a more than seven-year high a few months later. Moreover, the central bank recently decided to halt the purchase of foreign currency in the domestic market for the remainder of 2023, aiming to stabilize the ruble.

The Bank of Russia attributes the significant decline in the ruble’s value this year, which is approximately 30% against the dollar, to Russia’s growing trade deficit. From January to July, the country’s current account surplus decreased by 85% compared to the previous year.

In the meantime, an economic advisor to President Vladimir Putin expressed that Russia desires a strong ruble and highlighted that the loose monetary policy is the primary factor contributing to the depreciation of the Russian currency.

Maxim Oreshkin, who provides financial advice to Putin, mentioned in an article quoted by Reuters, “The main reason for the weakening ruble and accelerating inflation is the soft monetary policy. The central bank has all the necessary tools to restore the situation in the near future and ensure that lending rates are brought down to sustainable levels.”